Data Race (NASDAQ: RACE) NEWS! 2 voice/data/fax: ONE LINE! Message Board

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Technology Stocks : Data Race (NASDAQ: RACE) NEWS! 2 voice/data/fax: ONE LINE!

RACE 333.17

-1.6%

Jan 30 9:30 AM EST

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To: John McGregor who wrote (27984)	2/20/1998 3:14:00 PM
From: drakes353	Read Replies (3) of 33268

John....I posted this in the Clubhouse earlier today: ......Well I guess I went to bed too early last night. Missed all that convert chit-chat. Just nabbed the article off of the Barrons' web site. Wouldn't ya know it...they discuss the CMYN deal. Tried to short it at $5 a few times back in the fall but never could get my hands on any shares. Should've tried harder...closed yesterday @ .34, oh well. (My missed opportunity heap consists of both longs and shorts, BTW.) You were talking about the RACE convert deal. Keep in mind that RACE's deal is not a typical death spiral situation because the holders can't convert at a discount. That will only happen if RACE gets delisted. Yes the lower the price goes the more dilutive it becomes but you need the discount for a true double whammy death spiral situation. The way this deal works right now is the preferred holders have the right to convert at the average of the 3 lowest closing bid prices over the previous 22 trading days. As of yesterday I think that was something like $2.625. There is absolutely no incentive for the preferred holders to pound the stock into the ground ahead of conversion because for them to make any money the stock needs to trade higher than the 3 low close bid average over the previous 22 days. Hopefully for their sake, it would trade higher on significant volume, you know, something on the order of 1 million shares. They need liquidity to short or sell their converted shares. They got it in spades yesterday. Plenty of trades went through at $3.50 and higher. Let's look at what kind of return the convert holders made on any conversions done at that price. $3.50 / $2.625 - 1 = 33% This is a huge, huge gain for one of these deals. It's well into triple digits on an annualized basis. FWIW, even if they were selling/shorting common at $3 yesterday they were making around 50% annualized, again huge. Anyone buying RACE on a price spike while the converts are still outstanding is providing liquidity for the preferred holders to exit their positions at a huge gain. If you must buy RACE over the near term do it in the vicinity of the lowest three closing bid prices over the previous 22 trading days. Don't get screwed (again) by these clowns (the convert holders.)

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