Floorless Preferred Stock/Debenture Message Board

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Strategies & Market Trends : Floorless Preferred Stock/Debenture

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To: CMon who wrote (885)	8/24/1999 5:06:00 PM
From: Gerald Walls	Read Replies (1) of 1438

the company can choose to redeem for cash (shares they would have issued * price ) if they can't stomach the dilution. This presumes they can get the cash. If not, then there is no floor after the feb 18 date and the shares convert according to the "lesser of" provisions. I agree that most likely the company won't have the money to pay for the stock, but even if they did ... How's this for a convoluted scenario: Wait until a couple of weeks before the end of the floor period, short then hell out of it to drive it way below $7.35 for five days, then cover, cover, cover. The price goes above $7.35 (meaning the call provision is moot) and then convert at the lowest five days of the past 22 to cover the rest of the short position and end up owning a significant block of stock to boot. If the stock is under $7.35 on conversion day and the price is significantly about the lowest five-day average, then the number of shares would be very large and the price relatively high and the company wouldn't be able to afford to avoid the dilution.

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