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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 229.93

+0.4%

11:15 AM EST

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To: Don Westermeyer who wrote (1204)	1/16/1998 10:00:00 AM
From: Oeconomicus	Read Replies (1) of 164684

Actually Don, it's LIBOR+3.5%, rising to L+4.0% if the loan isn't repaid in six months. On top of that, they issued warrants for 750,000 shares. The exercise price should be in the low 50s, so figure another $5mm of value based on the current price. They can cancel the warrants if they repay the loan inside 12 months and reduce numbers of them for repayment inside other deadlines out to 30 months. If the loan stays out the full three year term, that $5mm current warrant value represents another 2.2% p.a. return on the loan for an all-in cost of as much as 6.2% p.a. over libor. Clearly a "junk" yield. Bob

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