I asked the CFO to explain the deal. First of all, this is the same group of investors who came in with 5 million at the time Microsoft announced. They were obviously confident that things were going well as they stand to pay alot more than they did on the first round.
So, what are they getting for their 32 million? There is a max price based on 135% of yesterday's close of about $14 or around $19. There is a minimum of $5. They have to convert after 5 months and they can not sell for a month from which time they can sell up to 25% in any given month.
If they converted at the max price, they would get 1.684 million shares. If they had to convert at the minimum of $5, they would get 6.4 million shares.
So, while they could put pressure on the stock, they would damage the value of their current holding, and they would still be stuck holding a depressed stock which they would not be able to dump for a minimum of 9 months. Portico will have either succeeded or failed at that point. I think these guys are more commited than anyone.
Now on the other hand, imagine their brilliance if they simply bought all they could at $19 and then sold it for $200 or more in 2 or 3 years later. That would be a good investment. Personally, I would go for the gold and not risk the goose playing games.
Again, coversion takes place in 5 months.
I believe General Magic is offering a totally new business that could be as important as web browsing, search engines, network security, and electronic commerce. It may just change the way we live.
Not a bad basis for investment. Lets hope Bill Gates and all these others are right again. Hey, that's also you and me.
Regards,
Mark
PS I hope I got these numbers right. It's late. I'm going to bed. |
