SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Biotech / Medical : ARIAD Pharmaceuticals
ARIA 23.990.0%Feb 17 4:00 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Dr. John M. de Castro who wrote (739)10/13/1999 9:05:00 AM
From: Biomaven  Read Replies (1) of 4474
 
John,

This was the company redemption provision I referred to in my previous posts. Unfortunately, the way I read it, it doesn't buy the company much - they just get to pay out in cash the value of the common they would otherwise have to issue. Thus if the conversion price is 5/8, and the stock is at 1 1/4, it costs the company $10m to redeem the $5m worth of convertible.

Further, if the company started doing this, the preferred holders would then have to cover their shorts and the stock price would rise, making it even more expensive for the company to redeem the preferred.
(If the company is planning on redeeming part of the preferred, they should redeem only the last tranch, while the common is still depressed).

This is an unusually unfavorable redemption clause from the company's perspective - many floorless deals allow redemption at some fixed percentage over the original price.

Peter
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News