Hi Art,
Also, note the conversion rate on the LEXR convertible shares. It is quite low, indicating that the common shares are not likely to move very far in the next few years (except possibly down). This development suggests to me that Lexar will be favorable to a settlement from Toshiba, rather than having to go through the lengthy appeal process, at a high cost to both sides.
I disagree with you Art. This deal, seems to me, is in favor of the lenders and Lexar was in no position to bargain. The conversion price is low and carries a hefty interest rate. If Toshiba settles, even if at a lower amount, or pays-up as awarded, I see the convertible debt holders making money on this deal as the stock is most likely to go higher, and they will exercise. If they don't get a chance to exercise, they still earn interest at a good rate. I think, the investors probably have reviewed the matter and see odds in favor of some monetary compensation to Lexar from Toshiba. If they are wrong in this evaluation and the judgement is overturned, then the outcome is a bit uncertain. It will then depend on if Lexar is able to turn itself around.
Although, I agree Lexar would rather settle for a lesser amount out of court than fight it out as they don't have the resources to drag this on for ever.
-Pam |
