BlackStar, I agree - and didn't say that they would be Reg S. I'm just warning that y'all had better find out if they ARE going to be Reg S. If they aren't Reg S, there's still a problem if the conversion rate is floating.
The really insideous thing about these floating-rate debentures is that it feeds on itself. The more they sell, the lower the stock price drops. The lower the stock price drops, the more shares are issued under the floating conversion. The more shares are issued, the more selling there is... These things usually have NO FLOOR. That means that the company can be put into the embarrasing situation of having to issue more shares than they have authorized. It's happened. Then, they go begging to the shareholders, who really have no choice but to authorize the additional shares.
I also agree that it will almost certainly be ESVS that sells the debentures. Now, we have an interesting scenario here - we have a minority cross-ownership between ESVS and NETZ, yet, according to some of the rumors posted here (mainly posted as fact) effective common control. It will be illegal for the debenture holders to short ESVS during their holding period, but what about NETZ? In the end, would there be any difference in the outcome between shorting ESVS and shorting NETZ?
So, if want to really cook up a grand scheme (and, of course, this is pure speculation - not fact, but a possible scenario) we have NETZ as the willing host, first providing ESVS with the necessary tangible assets to continue it's NASDAQ listing through pure paper-based hocus-pocus, and then serving as the dumping-ground in proxy for floating-rate debentures. |
