George,
There are 9 institutions in the original $7M financing package. They could convert now at a little over $2/share, ie 80% of the average closing price for the last 20 trading days (~$2.5). Now lest you see this as a threat, remember they profit best on an updraft. Let's say they could have sold at the highest close back on Oct 14, 1997 when FTEL sold at $9.93. The average for the preceeding 20 days was $4.62 and 80% of that was at $3.70. So they could buy at $3.70 and sell at $9.93. At least that's the kind of leverage they have. All they have to do is wait.
Of the 9 institutions in the Series C Preferreds, only 1 owns less than 80k shares and JNC owns 482k. We saw a block of 82k trade at the bid last week, which didn't affect the price much. We don't see a lot of selling anyway but I doubt if they're going to mess with 5k blocks. I think time is on their side and they're long term investors by most people's standards. Once the momentum at Franklin reverses, they are in line with a doubling at least. It's not tricky but they can get even a bigger bang if they wait while we get the downtrend in hand and then sell their 1.6M warrants, continuing the downtrend. When the stock is as low as it goes, the market starts to see the pendulum swing back. With what they've gained from the warrant sale, they turn around and buy, creating their updraft. The stock begins to soar and of course, then they can sell into the rise. They have a tremendous stake in whether Franklin works. Why take a 25% profit now? Would you?
Of course, you may have to admit that if they take such a thrashing to the stock, many will never return and then they may get burned in return. Like I said, there was a 82k block on the bid last week and the stock hardly budged. Go figure.
WH
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