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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis
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To: WWS who wrote (1430)7/20/1998 12:53:00 AM
From: chester lee  Read Replies (1) of 2506
 
Is it floorless? Well let's see.

<<The Series B Preferred Stock is convertible into Common Stock of the Company at 120% of the "Initial Market Price," a five-day average of the Common Stock's current market price. The conversion price will be increased by one-half the amount by which the market price of the Common Stock on the date of conversion exceeds 200% of the Initial Market Price. Conversely, should the average daily trading price (as defined in the agreements) prior to a conversion be equal to or below 90% of the Initial Market Price, the conversion price will be equal to such average daily trading price.>>

I read the terms as such: (at conversion date)
1. at 120% of the "Initial Market Price (which is 3-11/16 on 7/13/98).
2. 50% of the market price, if the market price exceeds 200% of the Initial Market Price (3-11/16). <--- This is quite generous. I've never seen this large a percentage just on a double.
3. should the average daily trading price (as defined in the agreements) prior to a conversion be equal to or below 90% of the Initial Market Price, the conversion price will be equal to such average daily trading price.

Item #3 means a ZERO% discount, but notice there is NO floor. If the price at conversion is $0.50, then it is $0.50 (assuming that is the average daily trading price as defined in the agreements. It is Floorless.

Looks interesting, but the stock is too low to short.

chester
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