Bosco...
There is indeed a floor on these convertible shares, and I think that it is good to check pages -2- and -3- in the 8-K filing dated 9/10/99 for a better understanding. I would post the link to Freeedgar.com, but twice already SI has squidded extensive posts of mine whenever I include links to freeedgar text/filing bodies. A brief excerpt...
Initial Conversion Price.
Each Series D share and Series F share is
convertible, at the option of a Series D holder or Series F holder, as the case
may be, into that number of shares of common stock obtained by dividing the
liquidation preference by the conversion price. The liquidation preference of a
Series D share and a Series F share equals $10,000 plus any accrued and unpaid
dividends and any unpaid default interest on cash dividends. The initial
conversion price of a Series D share is $3.93. The initial conversion price of a
Series F share is $2.0531.
Resets of Conversion Price. The conversion price of each Series D share
will be reset following the last day of each September and March and on December
31, 1999 and June 30, 2000. The conversion price of each Series F share will be
reset following the last day of each September, December, March and June.
The reset price of a Series D share is equal to 110% of the average of the
closing bid prices of the common stock during the ten trading days immediately
after each reset date. The reset price of a Series F share will be equal to 90%
of the average of the closing bid prices of the common stock during the ten
trading days immediately after each reset date.
The conversion price of each Series D share and Series F share will only be
reset if the reset price is less than the then-effective conversion price. *(Which it was BTW for this first conversion period...what a surprise)
This explains why it is in the best interest of a short position holder who holds convertible shares to maintain their position for at least ten days following a conversion period.
In previous posts it was also outlined how several factors including margin, short squeezes, developments in business plan etc. could influence the upward momentum and price appreciation here
For a good comprehensive overview on this issue, I suggest a quick read of the last few months of posts here if you havn't already.
Best Regards,
John Madarasz |
