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Technology Stocks : Information Architects (IARC): E-Commerce & EIP
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To: JDN who wrote (3413)11/19/1997 4:02:00 PM
From: tech  Read Replies (1) of 10786
 
JDN >>RE: REG S. SHARES <<

The whole reason Reg. S. offerings are so bad, is that they ARE unregistered shares.

A Reg S. offering basically involves the selling of convertible notes/bonds that are not registered and do not come out of the total outstanding. At a later date, usually one year, the Reg. S. holder then converts his notes/bonds to shares. These shares are then tradable on the open market.

Two reasons Reg. S. shares are bad

1. Since they do not come out of the total outstanding, they cause instant dilution once they are converted.

2. Reg S. Holders often short the stock and then cover with their Reg S. shares, locking in a profit.

* NOTE Since the Reg S. shares are new shares, even the short covering doesn't help the stock. The person uses his own shares to cover and doesn't have to go to the market place like a MM has to when he covers his shorts.
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