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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: Zeev Hed who wrote (9631)3/21/1999 12:11:00 PM
From: Larry Brubaker  Read Replies (1) of 27311
 
Zeev, I don't think the 4.9% statement in the S-3 means that Castle Creek holds 4.9% of the common. What it says is something like they cannot convert preferred shares if it would result in them holding more than 4.9% of the common stock. I have a couple of ideas of what this might mean.

1. If all preferreds were converted and all warrants exercised, Castle Creek would hold more than 10% of the common. But any particular investor in the Castle Creek "fund" may not. This may mean that no particular individual who ponied up funds for this deal may hold more than 4.9%.

2. It may mean that Castle Creek has to sell common shares if they convert a sufficient number of preferred shares (and/or exercise warrants) sufficient to otherwise go over the 4.9% limitation.

3. It may be an attempt at some sort of end run around filing requirements as Paul suggested.
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