Rich, between Nov 1, 1998 and January 26, 1999 the number of shares of valence increased by a million shares (25.6 MM to 26.7 MM). The last S3/A strangely enough is registering 4.5 MM shares (at least in the fee calculation table), but the registration statement is only for CC series B of then 1.7 MM shares, any idea what the additional 2.8 MM shares are from?
AS for CC, I think that they do engage in hedging and delivering stock from conversion for the simple reason that by the end of the Sep q (the last 10 q) they had only 5.9 MM of the preferred A outstanding, meaning that $1.6 MM of that issue was converted. We will have to wait until we get the Dec Q to see how much of the series A has actually converted and how much is still outstanding. The point is that CC keeps its actual holding at or lower of 4.9% so they do not have to report hedging transactions.
The increase of about a million shares between November 98 and February 1999 would indicate to me that after the Sep Q, most of the remaining $5.9 of the series A was converted and sold (or delivered against the short position), and the fact that the short position in VLNC has stayed well above a million shares, indicate to me that since then, the series A was simply replaced with the series B partially or fully, I know not. There is nothing ominous about that, if CC can make 20% on their money in 2 months by hedging, they would be foolish not to. As a matter of fact, I would not be surprised if they turn around and issue a series C if they can get such conditions. If the stock falls under the ceiling they win, and if it stays above and give them a good 20% for less than 6 months they win as well.
Zeev |
