Regarding the Floorless Financing:
I live in Japan so it is hard for me to call the company, but it would be nice if someone could call and see if we have any protection against the use of these convertibles for shorting the stock, or if they have the right to refuse conversion and buy them back.
The following is an example of how they work, illustrated with another stock:
"The reason I am concerned is that the above convertibles are in essence "floorless convertibles", which give the holders of this debenture a tool to cause in theory **INFINITE** dilution of the current holders. Let's look at what could happen if these convertibles were to be misused for shorting. The holders of these convertibles have $2 MM of equivalent equity (or roughly the equivalent of 2 MM shares), thus they can "short against the block" 1MM shares at $2. As a result of their shorting the stock declines, to let say, $1/share, now they can go ahead and short another million shares, which cause further decline of the stock to $.5, where they can short another 2MM shares, this because as they bring the price down, their $2 MM could convert to 4 MM shares."
The more they short, they more the stock declines. The more the stock declines, the more stock they can buy with their convertibles......
If the company (BCAM) has the right to refuse conversion or buy them back, then we should be OK.
I would be buying BCAM now if I were not afraid of this issue. If I were a shareholder, I would recommend looking into this ASAP.
If anyone can clear up this issue, please let me know so that I can load up on the shares now.
Thanks to everyone for helping.
THC |
