Yesterday CARN filed an 8k giving details of the private placement.
The stock was sold for $6.01/share, a 12.5% discount from the market
price. The co. is supposed to get a registration statement deemed effective by 90 days, so we should be seeing an S-3.
Previously we were told the buyer was a long-term holder of CARN stock. I wonder. Personally, I would short the stock to capture the 12.5% discount, then cover when the registration is deemed effective to pick up a risk-free profit that is not much different from what would have happened with the discounted converts. If that's the case, some of the weakness we've seen in the stock price the last month might be attributable to shorting by the 'accredited investors.'
Here's the excerpt from the 8-k:
Item 5. Other Events.
On June 20, 1997, (the Closing Date ) the Registrant sold a total
of 415,000 shares of its Common Stock, par value $.01 per share (the
Shares ), to accredited investors, as defined in Rule 501(a)
promulgated under the Securities Act of 1933, as amended, for an
aggregate of $2,496,484.38 in a self-managed private placement. The
purchase price was determined through discussions between the Registrant
and a representative of the investors and was based on the last reported
sale price of the Common Stock on June 3, 1997 ($6.875), less a discount
of 12.5% to approximate the liquidity risk inherent in unregistered
stock. Net proceeds to the Registrant are expected to be approximately
$2,475,000 after payment of expenses. Proceeds of the sale will be used
by the Registrant for general corporate purposes.
The sale of the Shares to the investors was made pursuant to a
Stock Purchase Agreement between the Registrant and each investor
(collectively, the Stock Purchase Agreements ). Under the Stock
Purchase Agreements, the Registrant agreed to use its reasonable best
efforts to (i) amend its pending Form S-3 Registration Statement No.
333-17177 (the Registration Statement ), currently on file with the
Securities and Exchange Commission (the SEC ), to the extent necessary
to permit the sale or other disposition of the Shares by the investors,
and (ii) cause the Registration Statement to be declared effective by
the SEC within 90 days after the Closing Date and to remain effective
for up to one year from the Closing Date. However, under the terms of
the Stock Purchase Agreements, the Registrant would not be penalized for
failing to effect such registration or to keep it effective, provided
the Registrant used its reasonable best efforts to do so. |
