Thanks to all for your help. In case anyone here does not understand Reg. S convertible debentures, I will try to explain them:
Reg. S stands for Regulation S. It is a type of private placement, almost always using off-shore $$$. Investors buy convertible debentures (instruments that can be converted to shares of the company's stock at a later, specified date).
The debentures have a maturity date (as little as 41 days, but since April 27, that time frame has become a minimum of 1 year) at which time the debenture holders can convert the debentures to shares of stock in the company that issued the debentures (the same company that received the private placement funds, less the broker's placement fee of 5-15%).
The investors can convert their debentures for a discount off of the bid price for a given previous day, or average of previous days. These discounts are usually in the 20-30% range.
For example, Company A's share price on Tuesday closes at $1.10 bid and $1.20 ask. The previous day, Monday, the price closed at $1.00 bid and $1.10 ask. Now, if the investor wanted to convert $10,000 worth of debentures into shares on Tuesday, and the debenture agreement called for a 30% discount off of the previous day's bid price, the investor would get $10,000 worth of shares for $.70 per share. That is 30% (in this example) off the dollar bid price for Monday, the previous day.
You can easily see how this can chap the hide of shareholders who are paying full price for their shares. They hate the use of Reg. S money.
Hope this helps,
Dexx |
