Brilliant Digital Entertainment -- BDE Message Board

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Technology Stocks : Brilliant Digital Entertainment -- BDE

BDE 6.650

+0.8%

Aug 11 5:00 PM EST

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To: Bald Eagle who wrote (344)	8/7/1999 1:55:00 PM
From: david james	Read Replies (1) of 395

I don't like this financing because they are 'perceived' to be floorless convertible debentures. They are not. The term 'floorless' usually applies to debentures where the holder is motivated to drive the stock down to create the lowest possible conversion price. In this case, BDE management determines how many shares, and at what price any conversion takes place. So unless BDE management is telling St. Annes ahead of time when they will be converting, there is no point to drive the stock down, as would be typical of floorless convertible debentures. St. Annes gets stock between 12% and 15% below the price at the time BDE asks for cash, and it would be silly for BDE management to ask for cash after the price has dropped. This kind of 'secondary' may create a lid on the stock when it moves over $6 though since the maximal conversion price is $6. Personally, I would like them to just convert the entire $6 mill now at $4 and be done with it. I don't think this sort of financing is directly hurting the stock, but I do think the confusion between this and the typical floorless convertible financing, is creating weakness. Thought this was an interesting story that appears to have just come out... vidy.com BDE got the cover too vidy.com

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