Sepracor-Looks very promising Message Board

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Biotech / Medical : Sepracor-Looks very promising

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To: BMcV who wrote (983)	7/8/1998 8:40:00 PM
From: Ed Ajootian	Read Replies (3) of 10280

Bruce, The $47.50 convertible notes are holding down the price at this level because they represent additional dilution to anyone paying higher than this price for the stock. No rocket science here. When the stock price is under $47.50, the convertible notes are in effect just debt. But as soon as the stock price gets to $47.50, the convertible notes in effect turn into stock (or more precisely common stock equivalents) and thus there is dilution to anyone paying more than this price for the stock. There are 32 mm shares out right now if you count the shares that the previous convertible note offering are convertible into. So with this latest offering we get about a 12% increase in the # of outstanding shares when the stock price goes over $47.50 ( 189 mm / $47.50 / 32 mm). The only way we blow through this roadblock is some wildly positive event that wasn't already anticipated by the markets.

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