The convertible was manipulated this way:
FNSR announces it was going ahead with the convertible that had been postponed in August of 2001. ML is the underwriter for the $100 mil offering and announces it will be priced that evening. Well, FNSR's stock takes a 30% haircut, so the 25% conversion premium applied to the convertibles goes from $7 and change to $5 and change, because the stock drops so much on the day of the announcement. I wish I had my old post, but the volume traded that day equaled something like $25 million. So ML can 'spend' $25 mil to price a $100 mil offering at a much better conversion price, benefiting themselves and their clients.
Right after the pricing, FNSR goes on a moonshot to $15, and the holders of the convertibles are super-happy. FNSR the company, isn't happy, as they could have priced a larger offering at a higher price, say $10+ just 30 days later. It was such an obvious bullshit pricing, ML totally took advantage of the rookie management to benefit itself.
I never traded FNSR again after that, until now, and I should have stayed with my guts.
A-M-S |
