Pancho,
I am still trying to get a feel for the mechanics of the convertibles. Which ones are the best (from the short perspective, of course)? Is it always possible to tell from a press release or SEC filing?
Here is a fresh example:
"Thursday March 26, 4:13 pm Eastern Time
Company Press Release
Organogenesis Inc. Announces $20 Million Equity Funding and 1997 Fourth Quarter and Year End Results
CANTON, Mass.--(BW HealthWire)--March 26, 1998--Organogenesis Inc. (AMEX:ORG - news) today announced completion of a $20 million financing of Convertible Preferred Stock with two institutional investors. The preferred shares pay no dividends and are convertible into common stock on a scheduled basis over the next two years based on market price at time of conversion (up to $36 per share). In addition, the investors received 160,000 three-year warrants to purchase Common Stock at $39 per share. Reedland Capital Partners, a division of the Financial West Group, acted as placement agent in the offering.>>
Is it a floorless convertible? If it does not pay a divident, what is the incentive for the investors to hold the preferred shares if they convert "based on market price at time of conversion"???
The stock has just had a huge run-up before this announcement. I think the bulls expected over $100 mln equity investment from Novartis who already owns worldwide rights to their wound dressing. This is actually a very ZONA-like "biotech" stock. Nonsensical, useless "revolutionary" product, $200K revenues vs. $4.5 mln expenses in Q4, $5 mln cash, $800,000,000 market cap...Sounds familiar, doesn't it?
I would appreciate your comment. Thank you.
T. |
