CDMA, Qualcomm, [Hong Kong, Korea, LA] THE MARKET TEST! Message Board

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Technology Stocks : CDMA, Qualcomm, [Hong Kong, Korea, LA] THE MARKET TEST!

QCOM 175.25

+0.6%

Dec 19 9:30 AM EST

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To: Ramsey Su who wrote (1631)	2/11/1997 4:38:00 PM
From: Andre Lukas	of 1819

Ramsey, the dilution is only about 10% of the current outstanding shares. Preferred shares between $450M to $500M. Conversion price is between 23% to 25% premium over the closing price of February 19, 1997. Thus if QCOM closes at around $ 60 on 2/19, conversion price is around $75. Preferred shares are non callable for 3 years and carries 5 3/4% dividend. Why go this route? This is a smart move by QCOM management. You get to issue equity at around $ 75 with an "interest rate" of just 5 3/4%. The balance sheet will be stronger: more equity and minimal Long Term debt. Financing of project is readily available with $ 500M on hand. With that sterling balance sheet, just imagine what kind of rating Moody or SP will give should QCOM decided to float a bond. Regards Andre

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