INPR - Inprise to Borland (BORL) Message Board

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Technology Stocks : INPR - Inprise to Borland (BORL)

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To: Cube who wrote (2546)	4/4/1999 10:55:00 AM
From: Ghassan I. Ghandour	Read Replies (2) of 5102

These so called floorless convertibles are indeed potentially very harmful if the company is fully in debt and at the verge of being banckrupt. This is not the case here as there is a close in the deal which stipulates that the company could opt to pay back in cash (plus 10% interest) instead of in stock. The company has the money to do so. If the borrower shorts the stock, at a certain point he may end up with no shares to cover. If the company does well, of is bought out as becomes more likely as the price of the stock goes down, the short may place the borrower suddenly in big trouble. The situation as I see it is like this. You lend me $100 and accept to get it back as 55 shares of my stock which now trades at $2. If in a year, however, my stock is trading at $1, I will have to give you 110 shares of $110. This seems a fair deal to me unless I don't have the option to pay you back in cash, instead. What am I missing here? Ghassan.

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