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Technology Stocks : Orbital science (ORB)
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To: Angelo J Cici who wrote (719)1/18/1998 9:20:00 AM
From: Mohan Marette  Read Replies (1) of 2394
 
100 mil (5%-5 yr) notes and possible dilution in 1998.

Angelo, I looked up the news on the 100 mil 5% convertible subordinated notes.I understand it is due in Oct 2002,and is non- callable for 3 years,and further they are convertible at the option of $28.00 per share.

It looks like Orbi has used a portion of the sale to pay down outstanding borrowing under its various lines of credit,possibly costing them more than 5% in interest. 10 mil, they used to pay off a long term loan, and the balance is invested in short term instruments, giving us an indication possibly that they intend to deploy this amount to either pay down some of the loans or possibly use to for acquisition and or capital spending. At the end of Sept the short term investments stood at some 39 mil. Long term loans were approx 206 mil of which 100 mil represents this particular note.

If the options on the note is exercised by the holders at $28.00 share,the possible dilution i think would be approx 10%. I do not know the earliest possible date when the note holders can exercise their option as there was no mention of it in the 10Q report I read,either that or I missed it.

So Angelo my question is why do you say that there is a possibility of earnings dilution in Q4 97? Do you think some of the note holders have already exercised their option in Q4? I am anxious to know your reasoning.
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