Greg, the whole floorless scenario requires that CC would have sold short the shares at a much higher price, so their profit has two components: the shorted shares (profit=sale price less conversion price) and the 'extra' new shares that would be acquired by converting below the fixed conversion price.
But if they drive the price to zero and bankrupt a company, the extra shares are worthless. And the OTHER 2/3 of their shares are equally worthless. (They are committed to prices of $6.03 and $6.78, w/ extra deflation factor of 6%, for the original $7.5M tranche and for the 900,000 warrants, respectively.)
The thesis that CC would even desire to drive the stock down as low as some suggest is ridiculous: they cannot recover the other 2/3 of their investment, and the gain is highly limited on the variably converted shares.
The more reasonable thesis is that since Valence's factory is a highly valuable revenue generator, CC does better by staying long and selling at shareprices of 15 or 24 or 40 (likely at the first spike, after the first big PO, and within a year of the first big PO, respectively).
Only time will tell. If Berg is supporting the stock here, that will be very bullish for the street, and CC will be covering here (IF they still have a net short position at all... which would be an extreme assumption to make).
Those holding naked short positions (of which I speculate there are 1.5 to 2 million shares) are in an extremely vulnerable position. |
