Rite-AID (RAD) Overdone or Done In? Message Board

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Non-Tech : Rite-AID (RAD) Overdone or Done In?

RAD 0.648

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Oct 16 5:00 PM EST

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To: rxpro who wrote (613)	5/27/2001 4:27:17 PM
From: Maven	Read Replies (1) of 700

I have noticed that the 5.25% cv bonds of 2002 are quoted at 97.5 (or $975 per 1,000 face-value bond). Since RAD has announced that they plan to call these bonds and offer 145 common shares each, simple arithmetic says that 145 x $9 (present price) equals $1305. So why is a bond potentially worth $1305 selling for $975? Are investors wary that the announced refinancing may not occur? Is the anticipated dilution so great that the shares will drop to less than $7? That's what the divergence in price seems to indicate. I'd sure appreciate it if any of you on this thread with accountancy background could tell me if this is an opportunity or a trap. For full disclosure, I'm a heavy holder of RAD common with an average cost of $5.33

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