VALENCE TECHNOLOGY (VLNC) Message Board

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Technology Stocks : VALENCE TECHNOLOGY (VLNC)

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To: Rich Wolf who wrote (9572)	3/20/1999 10:33:00 AM
From: Harold Hertzfeld	Read Replies (2) of 27311

Rich. Thanks very much for this post. My comments.... CC can acquire new additional common stock by exercising their warrants at 6 7/8 which is the current price level. CC may have already hedged their warrant and some or all of the stock position by shorting (borrowed) common stock at higher prices. Is it possible that the "floor" at 6 7/8 is due to CC being the current ever present BUYER at these levels? You state that CC would be " better off to cover that position in the open market as much as possible " by buying back their shares at prices under the price that the shorts took place." I agree. If CC suddenly believed that Valence was about to make a material announcement that would send the stock price flying it would make sense for them to cover their short position at this level. This would first of all let them take home a profit on their short position by buying back the shares that were shorted at a higher price. This would leave them with their Pref A share position in tact that they have held since last July....thereby protecting their holding period for tax purposes and setting up a long term capital gain status by this July (12 months ). That is a lot of tax savings. And it would let them realize all of the upside profit from this level. Hmmmm. That could give the shorts something to consider. And finally, the conversion of the preferred may be a necessary step that would make new financing by other lenders more likely. It would "free up Valence's balance sheet" for a more traditional bond and bank loan financing. At the same time the announcement of more conservative financing package would be the next best thing to a PO....and probably send the common stock up to a higher level...thereby giving CC and all of us much more comfort than we have right now. I am praying hard for wisdom for Lev and his team... some extra prayers by all of us might help. Thanks again.

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