They did not do a floorless convertible...there is a limit of 3.48 million shares to convert the preferred
Where are you getting this limit from? The only limit that I recall was the 4.9% limitation by any one holder, and that can easily be "remedied" by them selling part of their holding before converting.
Here's an extract from the Registration statement:
up until December 20, 1998, each share of Preferred Stock will be convertible into that number of shares of Common Stock equal to the per share face value of the Preferred Stock ($1,000) divided by a conversion price of $14.55 per share, subject to certain anti-dilution price adjustment protection. At such conversion price, the 20,000 shares of Preferred Stock currently held by the Selling Stockholders will be convertible into 1,374,569 shares of Common Stock. On and after December 21, 1998, however, the conversion price per share of Preferred Stock shall become the lower of (i) $14.55 and (ii) the average closing price of the Company's Common Stock as quoted by the Nasdaq National Market for any five trading days, selected by the holder, during the twenty trading days immediately preceding the date of conversion. As a result, the number of shares of Common Stock issuable upon conversion of the Preferred Stock may increase above, but will not decrease below, 1,374,569 shares.
So at the current price, unless I am missing something, there would be around 5 million new shares, more if they short it aggressively on the 5 reference days after December 21. (Although this might be considered as an illegal market manipulation if they were to do it). The Preferred agreement specifically allows short selling, by the way.
Peter |
