Conductus Gives Dobson Warrant for 500,000 Shares
(Update1)
By Jonathan Berr
Sunnyvale, California, Aug. 17 (Bloomberg) -- Conductus Inc., a developer of products that boost the range of wireless networks, said it gave Dobson Communications Corp. the right to buy as many as 500,000 shares at a price that is now below their market value.
Conductus issued the warrant as part of Dobson's agreement to buy 200 systems within two years. Before Dobson can buy all of the shares, it must purchase many more systems, Conductus said in a U.S. Securities and Exchange Commission filing.
The warrant allows Dobson to buy Conductus shares at $13.43 each, 26 percent less than yesterday's closing price. The 500,000 shares amount to about 4.3 percent of Conductus's shares outstanding. The stock fell 7/8 to 17 3/8.
The warrant ``was a good strategic business decision,'' because it gave Dobson an incentive to use the product, Conductus Chief Financial Officer Ron Wilderink said. ``It's something that a number of companies have done.''
The warrant price was based on the stock's value at the time of the transaction, Wilderink said. Conductus shares had risen 55 percent this year.
Conductus, based in Sunnyvale, California, announced Dobson's order last week without mentioning the warrant. Dobson, based in Oklahoma City, owns cellular networks in rural areas of 18 states. Dobson officials couldn't immediately be reached for comment.
Dobson shares fell 1 1/2 to 20 1/8.
Superconductor Technologies Inc., a Conductus competitor, signed a five-year agreement last year to give U.S. Cellular Corp. a warrant to buy one share of its stock for every $25 in product purchases.
Products made by Conductus and rivals use superconductor technology to reduce interference on cellular phone networks. Other companies are developing superconductors to improve the flow of power on transmission lines.
Superconductivity is achieved when electricity moves through materials cooled to very low temperatures with little or no resistance. |
