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Non-Tech : Boston Market (BOSTQ)
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To: Richard R who wrote (1404)7/23/1998 12:25:00 PM
From: Fred McCutcheon  Read Replies (1) of 1567
 
The trust deed securing the LYONs states that BOST must give notice of its intention to pay in shares, nothing about the number of shares. By being silent about the number of shares or the share price, the words lead me to believe that BOST is obligated to provide a "value" of 380/M.

If your sources are correct, the put would be merely a conversion option, which the holders already have, not an additional benefit. If that is the case, why does the put option exist?

I don't have it to hand, but Merrill Lynch did a piece on the put option about 6 months ago in one of their reports on BOST which supported the conclusion I reached by reading the trust deed.

On the assumption that the put option requires BOST to provide real value, in cash shares or otherwise (other debt??), the LYONs have a real maturity date of June 1, 2000 and are thus worth more than the other series which mature later.

The early put gives the LYON holders a real edge in any restructuring negotiations that will be starting soon.

Worst case, all of the above is wrong or will be overridden by some circumstances associated with restructuring or bankruptcy. Then the LYONs revert to ranking parri passu with the others with the earliest maturity date of any series. This makes long LYONs/short others a breakeven at worst with the possible upside of all of the above.

Let's keep the discussion going.

Fred McCutcheon
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