CS,
Please give me the two minute rundown of this situation. I reluctantly covered my (too large) short position some time ago, at a (too large) loss. I have continued to follow CDRD, but not as closely as when I had (too much) money at stake.
This is my understanding, please correct the parts that are wrong:
1. Any preferred "C" shareholder who wishes to convert and sell after Nov. 14th may do so **regardless of what the other shareholders decide to do.** Thus, having "more than 50%" agree to the reorganization implies that "somewhat less than 50%" have refused, and will therefore flip and dump. Is that right?
2. If "enough" preferred holders agree to the reorganization, they will issue a 3.5 million share secondary to help finance the reorganization. What is the magic number? 60%? Or, is the 50+% they already have on board enough? I cannot immagine they could *both* manage to do a secondary *and* absorb the conversion of a large percentage of the old preferred holders.... the secondary would have to go off at a *very* low number, right?
3. What am I missing? This looks too easy. The last time I thought CDRD was giving away free money to anyone willing to short the stock, I got hammered, in a very big way. Is it reasonable to anticipate that Merril Lynch will prop the stock up, for purposes of the secondary? Something else?
The more I think about their press release, the more it seems that you are right, and that this is their way of conceeding defeat. But, I have learned (the hard way) to be cautious.
Sorry for the request, but if you could catch me up on the in's and out's of this situation, I would much appreciate it.
TIA,
RB |
