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Technology Stocks : America On-Line (AOL)
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To: Vendit™ who wrote (9983)4/8/1999 1:34:00 PM
From: Joe E.  Read Replies (1) of 41369
 
"I would urge you to re-read the Tribune news release. Looks to me like the Tribune used some of their AOL stock as collatoral for a 30 year loan. Their AOL stock was not sold."
Technically, you are right, but since the securities can be exchanged for the dollar value of AOL shares in 2029, plus pay a dividend, they are an attractive alternative to buying AOL shares directly for mutual funds. Thus what Tribune did was equivalent to selling the shares in terms of sopping up market demand for AOL.
From Trib's point of view, they get the money now, can invest it in anything paying more than 2% before tax and still make a profit and they avoid paying capital gains tax on the transaction. Effectively from Trib's point of view they sold their interest in the AOL shares.
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