Floorless Preferred Stock/Debenture Message Board

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Strategies & Market Trends : Floorless Preferred Stock/Debenture

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To: Rajiv who wrote (866)	8/24/1999 1:45:00 PM
From: Mama Bear	Read Replies (1) of 1438

"Don't you think they are taking substantial risk by playing this game?" Rajiv, these instruments are written so that the floorless issuers are taking very little to no risk. Every one that I have seen has a 'lookback' clause that prevents the sort of risk you have described. The clause usually allows them to convert at a set percentage discount to the lowest bid or the average of the lowest 3 closing bids over the previous x number of days. So if WXYZ is trading at 1/2 for 9 days and suddenly shoots to 10, they have every right to demand delivery of their freshly printed shares at 1/2. Barb

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