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Pastimes : The Perils and Pitfalls of Investing With "Friends"
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To: Done, gone. who wrote (16)10/26/2004 1:28:32 AM
From: Bill Ulrich   of 377
 
TLC might make a spectacular CEO. Man, I wish CSHK, RMIL, SEXI or AZNT had warrants. Surely we can get him a job somewhere. I offered him one, but got no response. Now I see why &#151 he had a much bigger picture in mind.

"Here is a brief outline of the concept. One million shares go to friendly hands. With those one million shares go 5 million warrants. Nobody sells the warrants. When the stock trades above a dollar, we *exercise* our warrants, which means we pay a dollar (the exercise price) and we get a share of stock for each warrant. The warrants will be freely trading, but what these guys want to do is keep all the warrants in friendly hands.

It's pretty cool. If you did not know, you can exercise warrants with no money under certain circumstances. If the stock is trading above the exercise price of the warrants, the brokerage firm will loan you the money to exercise the warrants and then sell the stock and pay their loan back, and you pocket the difference. They are happy to do this because it is a no risk deal and they get a commission. So the way this will work if it works is that liquidate the warrants and the stock over a period of time. The key is that the stock has to be trading above a dollar. If it goes really well, like the stock goes above 2 or 3 bucks, we could really make a nice score on this."
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