Andrew, thanks for shedding some light on LGNDW. I realize I'm asking pretty dumb questions here, but... here goes:
Question: say one buys some LGNDW shares. Before the year 2000, can one exercise the right to convert to LGND shares? If for some reason one wanted to get out of LGNDW, can one sell the LGNDW shares directly, or would one have to convert them into LGND and then sell the LGND shares?
Scenario:
Investor A buys 1000 LGNDW shares at 8.375 for $8375.00.
Investor B, the same day, buys 600 shares of LGND @ 13.75 for $8250.00.
So they both have made about the same intial investment.
Ok. Fast forward two years.
Let's say LGND is now trading, in June 1999, at $30 per share.
Investor B's LGND shares are now worth $18000. A nice return.
What is Investor A's situation at this point? Let's say that LGNDW shares are now selling at $22.00. That would mean Investor A's investment was worth $22000.
At this point, can Investor A sell the LGNDW shares outright, and collect the $22000? Can he also convert them into LGND shares? If yes, let me see if I got this straight. Investor A could convert 1000 LGNDW's into 1000 LGND's at 7.12 + 8.375, or about $16/share. Ok, but the LGNDW's are selling at $22 a share, so would Investor A also get $6/share in cash?
What happens to the difference? |
