My speculation: If there is $7,400,000 of convertible debt and if 20% per month can be converted starting September 8, 1998(1st day to convert at $1 because of 20 day average stock price), then the convertible holders would like to keep the conversion price at $1 until Jan 8, 1999. At that time they will have been able to convert to 7,400,000 shares. So that means that they would like to sell less than 7,400,000 shares short by Jan 8 1999 for as much over $7,400,000 as they can.
Anything over $7.4M plus shares left is their profit. Probably ideal for them, is to be able to sell enough shares short to get back their $7.4M, buy back all the shorts well under a dollar, and end up with 7.4 million shares of FTEL. When the pieces fall in place after Jan 99, slowly sell off the shares as the price rises. Short of buying up all 7.4M shares, the best compromise for existing shareholders is end up with as many of those 7.4M shares as possible by Jan 99. If 7.4M shares trade for under a $1, someone has bought a third of a company that will probably be worth at least 10-30 times that and maybe much more. |
