Steve--Companies sell debentures knowing full well that the debentures have a 99.5% chance of being exercised, and knowing full well that they, the company, are diluting their own stock.
Look at it from the debenture holder's point of view: If they hold the note to closure, they receive 7% to 12% interest. But if they convert the note to stock, they are guaranteed a 15% return now. This being the era of quick gratification, it should come as little surprise when a debenture note holder converts their note.
This being said, why do small companies love debentures so much? Well, no bank loans to deal with. No names on a dotted line. Nothing to deal with if the company folds; the former management gets to walk away. Just bloat the float, so sorry, Mr. Small Investor.
My point is, Oilex management knew what it was doing when it wrote those eight or nine debenture notes late late year and early this year. To cry foul against the debenture note holder is silly.
Oh, Steve? I really hate to admit this, but I have averaged down three times on this sucker. I am under water on each "investment." Do you really think I need more of this abuse?
I guess my real question is, When and how is CAYC going to get their stock back to $4?
Cheers!
Rick |
