"You speak of HEC's European debenture as if it were a floorless. If you and I are thinking about the same issue, it's not a floorless; it's a straight convertible debenture.
I pulled the S-3 filed 6/26/98 which describes HEC's series F convertibles and I read the language as that of the floorless "death spiral" convert. HEC does have the option of buying the convert back, but this is a standard clause, and it is not something one would expect them to do. After all, they would not enter into the deal if they did not need the money. So, while HEC does have the option of paying in cash, the question then would be, where does it come from?
This is language from the 6/26/98 S-3, and would not be needed in a straight convertible debenture, as the maximum dilution from such is known in advance:
"As of June 16, 1998 and at an assumed conversion and exercise price of $4.50 per share, the Series F Preferred and the related options would have been convertible or exercisable into approximately 7,600,000 shares of Common Stock, but this number of shares could prove to be significantly greater in the event of a decrease in the trading price of the Common Stock. Purchasers of Common Stock could therefore experience substantial dilution of their investment upon conversion of the Series F Preferred and exercise of the related options."
Barb |
