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Non-Tech : Boston Market (BOSTQ)
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To: Fred McCutcheon who wrote (1403)7/22/1998 7:11:00 PM
From: Richard R  Read Replies (1) of 1567
 
Put option of the LYONS

There is considerable confusion, at least on my part, about the put option of the LYONs. The LYONs can be converted by the holder at any time to 8.532 shares of common. You are correct about the holder also having the right to put the LYONs to the company on 6/1/00 at a price of 30.80 ($380.00 per bond). However, in this case the company has the right to pay either in cash or in shares of stock.

The question is, if they choose to pay in stock, how many shares of stock is it? Is the number of shares = 380.00 / current stock price? Or is it 8.532 shares? When I asked the company about it, they said they could pay with 8.532 shares without regard for the current stock price. I got the same answer from a bond dealer.

If the LYONs are worth only 8.532 shares when put to the company on 6/1/00, the put option is worthless at current stock prices. So the LYONs should trade at about the same percentage of par as the other bonds.

Do I have this right?
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