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Technology Stocks : Cymer (CYMI)
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To: nycnpbbkr who wrote (8429)11/5/1997 10:13:00 PM
From: Jess Beltz  Read Replies (1) of 25960
 
Ken, point well taken, however i would like to say the following.

(1) The cap protection offered by the convertibles is only for short sales covered if and when the share price climbs above $47.

(2) The only way the short seller has zero risk is if he enters into the entire short position at the conversion price, which is not possible in this case, and not supported by the short interest data that we have.

(3) The short seller has limited but still substantial risk on any short sale below $47.

(4) Let's not forget that the debt issue was requested by and raised for Cymer! It was not some artifice created out of thin air to provide a vehicle by which short sellers could pound the stock with impunity. They (the company) aggreed to attach the equity kicker to the debentures because the option had value which they could realize by paying a lower interest rate. At the time the debt issue was being drawn up, the stock price was on a rocket trajectory and the option value was real. It is only ex post that the bonds are seen to have another possible use, ie the cap for short sellers.

(5) Again, the reasons for the initial slide have everything to do with what happened at the Needham conference.

This is a classic case study in the development of conspiracy theories. There is one coincidental fact here, that of the last reported short interest and the number of shares that could be generated by a wholesale conversion of the bond issue. A series of highly improbable or questionable "coincidences" merits serious investigation. If we step up to the plate at the SEC with a history of some rumors and one coincidence, we're asking to be burned to the ground.

jess.

PS - stay in touch. I'm glad you're investigating this. jb.
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