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Strategies & Market Trends : Arbitrage Plays

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To: LauA who wrote (35)	7/16/1999 12:56:00 PM
From: LauA	Read Replies (1) of 376

Which then raises the issue of MOTR which has nil debt, is selling at book value, and earns 15% on equity. They've come back from a single storm related loss disaster. They are trying to diversify out of New Jersey. NEIC gives them access to Maine, and also New York through a dormant subsidiary. (NEIC is selling at book, and has tax loss carry forward.) MOTR intends to cover the cash payment for NEIC via issuance of debenture(s) in tranche(s) of $10 million that the insiders intent to buy (with a 7% coupon). This debt will be convertible into MOTR shares at 130% of the average price of MOTR stock for the 20 days prior to the merger. They carefully note that such conversion would increase their ownership to more than 50%. My be would be that there is every incentive in the world for MOTR management to keep the price of MOTR stock as low as possible until after the merger. In fact 130% of the current stock price would place it at ~$17/share, which is where it sat prior to all this mischief. I would guess that buying from both take out windows at this burger joint might make a happy meal. Lau

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