FMK, look at an example of a floorless:
quote.yahoo.com
The recent bottom coincided with management buying back the floorless (including the Chairman putting a million bucks of his own money).
The floorless are a new instrument invented after the SEC clamped down on the abuses of the Reg S securities. There are many convertible issues, but floorless convertibility is reserved for corporations that cannot access normal capital markets.
Typically, the existence of a floorless is taken by me as a warning signal that the financial foundations of the issuing company are shaken and the survival of the company is doubtful. I do not know if that is going to be the case with VLNC, but time is pressing and additional financing certainly will be a major issue. Will they be able to access normal financing channels? I do not know.
We have a special thread on floorless on SI. Just use the search engine with the term "Floorless". I have posted there quite often.
As for your second post, I used numbers from a prior posters. I would suggest you try and use as a maximum top sales (within let say three year?) as a " fair corporate valuation" today ( or any value you think is rational, just present your own rational). Make sure that at your production rates you are not reaching twice the market size. A poster gave us very good estimate of the short term market size for portable computers, about 15 MM units per year. It would be quite a success for VLNC to have 10% penetration (and they must show at Comdex next week to be in contention for the next six months) or 1.5 Mm units per year, that will get them to $112 MM sales annual, current valuation of $200 MM, is in view of these numbers quite fair, if not overvalued. In view of the possible clear and present danger of not meeting the deadline, I am not surprised to see acceleration of the short position in the stock. The current price assumes everything will go right (it rarely does), the failure to meet the deadline could mean the stock could decline under $1 per share.
Zeev |
