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Technology Stocks : The New QLogic (ANCR)
QLGC 16.070.0%Aug 24 5:00 PM EST
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To: George Dawson who wrote (18790)10/25/1998 9:44:00 AM
From: Eleder2020  Read Replies (1) of 29386
 
George- Here is one way it could work for them.

1)convert first set of shares.
2)Short converted shares and take the money from the short sales
3)Sell your converted shares, thus effectively doubling the number of
shares you converted first time around and the amount of money you can take off the table.
4)Keep your short and use future converted shares as collateral.Shorts are protected by being boxed in this way.
5)Increase your short position as the float is now bigger so you can short more because you haven't yet approached 5 percent ownership.They also would short more as Ancor is now in the 1's and they need to increase their short to take additional money off the table.It would also explain the increase in short sales month after month.
6)As Greg said they convert at perhaps $1.16 which they received at a discount.
6A)Ancor goes to 1 3/4. They sell their recently converted $1.16 shares for 1 3/4 at a 50% profit.
6b)Their short doesn't have to be covered as they use future conversions as collateral.
7)Net result is that they can effectively convert, but not actually convert their Ancor shares well before the conversion date as their original converted shares were really sold twice. Once through the short and once through the conversion so though the converters effectively have 7 million to convert they may have shorted a great deal(it seems that way) which would effectivey lower the amount in dollars to say $3-4 million that they actually have to convert.

Just another scenario IMHO- Ed
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