>>The LYONs are currently trading at about $65.00 per bond.<<
Price of BOSTL is about $6.50, which means that 10 BOSTL = 1 LYON note. SEC filing didn't say anything about that, and I thought at first that 1 BOSTL = 1 LYON which would be a great cheap way to buy the common (doing the 8.532 conversion), and then sell the common for a nice profit.
Wouldn't it have made more sense to have 1 BOSTL = 1 LYON?? Knowing that 10 BOSTL = 1 LYON, I don't see why I would want to buy (if I did) in anything other than multiples of 10.
Suppose one owns 100 BOSTL, and they request a certificate. Would they receive a certificate for 100 BOSTL or a certificate for 10 bonds???
$30.80 in BOST and cash on 6/1/2000 for 1 BOSTL @ $6.50 is still a pretty good deal, taking into account the risk that the company may go out of business and in that event having to stand in line with the other debt-holders for first-dibs on getting money. Be close to a break-even if $.20 on the dollar were paid in that event.
Kurt
From SEC filings (last 10-k):
.....
In June 1995, the Company completed the sale of $828.0 million aggregate principal amount at maturity of Liquid Yield Option Notes due June 1, 2015 ("LYONs") for which the Company received gross proceeds of approximately $172.5 million. The LYONs are zero-coupon subordinated notes that were sold at an issue price of $208.29 per $1,000 principal amount due at maturity, representing an 8% yield. Each LYON is convertible at the option of the holder at any time
on or prior to maturity into 8.532 shares of common stock of the Company. In the event the holder exercises the option to convert, the holder will not receive any payment for the accrued original issue discount. The Company is obligated to purchase the LYONs at the option of the holder as of June 1, 2000, June 1, 2005, and June 1, 2010, for a purchase price per LYON of $308.32, $456.39, and $675.57, respectively. The Company may elect to pay the purchase price in cash, common stock of the Company or a combination thereof. Commencing on June 1, 2000, the LYONs are redeemable at the option of the Company for cash, at a price equal to the original issue price plus accrued original issue discount through the redemption date. In 1996 and 1997, $8.2 million and $26,000 of LYONs were converted into 328,942 shares and 955 shares of common stock, respectively. In addition, the Company is required, as of 40 business days after the occurrence of a Change in Control (as defined in the indenture relating to the LYONs) to purchase all or any part of any LYONs at the
option of the LYONs holder.
......
Kurt |
