Dave:
Im not sure if the price will be above $20 for a while, reason being:
$10 mil (first tranch of financing) due in a few days. The "investors" will surely go out and start naked short selling (not illegal if they can cover w/converted debentures).
$6.00 x 80%=$4.80 cost
$10,000,000 / $4.80= 2,083,334 shares, there will be an additional 416,667 shares if Rendall sells his. They will try to drive the price down b/c it lowers their avg. price for conversion. Therefore, if they could push it down to $5.00 during their naked short selling, they would pay $4.00 and thereby get more shares
$10,000,000 / $4.00 = 2,500,000 shares.
So it is in these investors interest to get the price lower before conversion. If they convert and dont sell or hold some stock, it is then in their interest to drive it up e.g. paying $4-4.80 and driving the price to $7.00.
What SOLV can do:
1) not deliver the shares-these people will be naked short many shares 1-2 million. they will be forced to cover as they cannot deliver the stock. SOLV will go up while they cover. SOLV will then have another lawsuit on their hands and they will surely never get reg s financing again
2) pay off the debenture themselves which will probably mean coughing up $10 million + $2 million interest + interest for 45 days. I dont think they can do this since they're out of $.
However, we might have been witnessing the naked short selling this past two weeks by these "investors."
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