Thor, <<<<<floorless conversion>>> mean for any stock?>> Usually the death of the company. Any form of funding that that allows conversion into stock which is tied to the current company stock trading price. Lets assume you're a company and I lend you $100 and with the promise of either repayment with interest, OR $100 worth of the company stock after some period of time from the loan, maybe the number of shares worth $100 over the last 4 or 5 trading days. If the company is strong and healthy, it's hard to play games they can repay the loan, but if a company is weak and doesn't have the cash, it can be manipulated. Here's how to play the game:
1. Sell short a large amount of stock to drive the price down.
2. Convert your $100 worth of stock at much lower prices, therefore lots of stock.
3. Cover your short, take a Caribbean cruise.
There is even a more sinister form of manipulation:
1. Naked sell short (MMs can do this) a large amount of stock to drive the price down.
2. Convert your $50 worth of stock at much lower prices, therefore lots of stock, then sell that stock.
3. Keep naked shorting the stock until the stock is worth fractions of a penny, then convert the remaining $50 for zillions of shares.
4. Financially destroy the company and you never have to cover your short.
There are many permutations, Zeev is SI's resident floorless expert.
Having gone through all this, it's still only a remote guess that Global has a floorless conversion going. Time will tell. |
