WAVX: Wave Systems Corp. Message Board

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Technology Stocks : WAVX: Wave Systems Corp.

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From: TREND1	8/29/2008 4:11:32 PM
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Posted by: Fullmoon Date: Friday, August 29, 2008 4:05:59 PM In reply to: xxxxcslewis who wrote msg# 170476 Post # of 170477 4X, wrong or right? Assuming Wave issues a convertible preferred, we need to see how it is structured. The "death spiral" preferreds are convertibles that are issued at a perpetual DISCOUNT to the market. Let's assume a 10% discount.... the holders of these pfds will be motivated to short the underlying stock because they know they can cover it 10% lower than where they shorted. SKS is well-aware of this type of pfd and their effect on the stock price. What if Wave issues a convertible pfd convertible at the market or at a premium? You won't see the selling pressure associated with the death spiral convertibles. In fact, combine that with some sort of coupon and you incent the pfd holders not to convert.

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