Yeah, and consider this re: variable conversion:
As I've argued before, it makes no sense for CC to be attempting such, and we've every reason to believe they are bullish on the stock.
First, a reminder that due to the 6%/year reduction in the $6.03/share fixed conversion rate, the threshold as of July 27 is actually $5.85/share. Hence, they need to get an average closing bid for any 6 out of ten consecutive trading days lower than $5.85 (not $6.03) to 'improve' their situation.
But here's a little-thought-of detail:
Assuming they invested millions not to make 10-20% but to make more $$ staying long, then what if they pushed the *average* price down to $5.27 (and I doubt it can stay down long if it ever does go down; recall the pattern last December? notice the action just today?)? They get 10% more shares on the series B preferred only (or, an extra 125,000 shares or so ... that's it! and THEN they need to be sure to cover what they shorted in pushing the price down, and cover at a profit).
AND here's the important part: they have to immediately convert, to get that price. Then they have common shares, with no 'inflation factor' as the preferreds have.
Then if they know the long-term potential, they'd be wanting to sell at higher prices. So they need to HOLD the stock. Once the stock starts running (after POs), they won't cap the rallies, but let the price run.
So if they *really* plan on selling two years from now, then it makes more sense to hold the PREFERRED shares and NOT convert (even if they were lucky enough to get 10% more shares), since by then they'll have 12% more shares upon conversion two years hence, due to the inflation factor.
Contrast that with the floorless scenario, and if they are *lucky* enough to get an average price 10% lower than $5.85, they must convert, get the shares, and then hold the shares. They lose the benefit of the inflation factor.
They're thinking large, folks, not nickels and dimes as some here would argue. I believe they'll hold ALL the preferred shares until the stock performs its bullish dance, and they'll convert ONLY when it's time to take their profits a few YEARS hence.
It needed to be said. |
