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Non-Tech : FRPT - Force Protection, Inc.
FRPT 60.15-1.3%3:59 PM EST
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To: Tadsamillionaire who wrote (62)1/24/2005 4:35:20 PM
From: Tom Caruthers  Read Replies (1) of 447
 
Hi Tim and JM,

This latest news on the financing has me a bit troubled...to the point of considering selling my shares in the company. I own a company called Ramtron that years ago underwent what they call a toxic convertible preferred offering or what is called fondly a "death spiral convertible" whose conversion price was determined by the average price of the stock over 60 days...very similar to the language in the press release for FRCP..."the preferred is convertible into common stock of Force Protection at $.32 per share, subject to adjustment based upon a market average price over 60 days."

This was nearly the kiss of death for poor RMTR as it gave the preferred share holders the incentive (by their affiliates) to short the stock into oblivion to reduce the share price so that their investment, when converted, bought controlling interest in the company. This financial instrument is supposed to be illegal, but is often entered into by cash strapped desperate companies unwittingly.

I hope this isn't what I think it is, but am waiting for the SEC disclosure. In addition, the substantial investment with a $0.32 conversion price may put a ceiling on the stock.

Anyhow, be interesting to get your thoughts.

Tom
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