Paul you got to be careful with your calculations, CC may stand to lose the opportunity to convert an additional 170,000 shares, but they are not going to lose $825,000. The potential loss depends on where they would have sold these shares, not the current cost of these shares. If you wanted to put a value, you could say that it is the difference between their ceiling of $6/share and the current potential conversion price time the number of additional shares or less than $200,000. Of course, if the working assumption is that CC has been shorting in the $7 to $8 range since January, then this "loss" is only a small portion of the nice gains they have on their short.
You should compare this potential loss against their potential gain, if for instance, after a short respite here, the price resumes its decline, to let say, $3.75. That is probably an exercise that the person at CC responsible for managing this part of their folio is doing when deciding on his strategy relative to CC's position.
Good luck.
Zeev |
