Floorless Preferred Stock/Debenture Message Board

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Strategies & Market Trends : Floorless Preferred Stock/Debenture

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To: John Dwyer who wrote (821)	8/10/1999 2:07:00 AM
From: Larry Brubaker	Read Replies (2) of 1438

John, you are right, it is complicated. I haven't spent the hours it would take to completely sort it out but it appears to be a true floorless (e.g., conversion at the lower of the fixed or market price, with no floor on the conversion price, and an acknowledgement by the company that they know the deal can substantially dilute the stock). And the stock has acted accordingly since the deal was done. I note that the most recent SEC filing is a proxy statement in which shareholders were asked to authorize an unlimited amount of shares to be issued upon conversion of the preferred shares. Not a good sign. At $1 per share, that would result in 5 million additional shares (assuming they have not sold any more of these since the initial tranche). At 50 cents per share, 10 million shares, etc. Without knowing anything about the company fundamentals, and having only skimmed the 8-K, it looks to me like ARIA is in the midst of a death spiral. Notice the increasing short position. Since mere mortals cannot short a stock priced at less than $5, one has to assume it is the work of the bandits. viwes.com

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