FLOORLESS CONVERTABLES (Revisited):
I was just reviewing the discussion on this thread,
which took place in mid-late Dec 1998, regarding
then recently-issued 15,000 shares of Series B
preferred stock and warrants in exchange for $15M
in invested capital. These securities were called
"floorless" because it was claimed they could be
converted into common stock at a price which had
no lower bound (or "floor")... thus the holders
of these securities could obtain a substantial
part of PCOM for only $15M. As I recall, there
was never any consensus reached on this thread as
to whether these securities were really floorless,
but I feel that they are floorless and have
shyed away from this stock as a result. I have
never been either long or short on PCOM.
One piece of information that was missing in late
December was the required S-3 filing with the SEC.
This was filed on 21 January 1999 and it has been
amended twice since then on 3 March 1999 and on
18 March 1999. These 3 filings are available at:
edgar-online.com
edgar-online.com
edgar-online.com
This summary is from the last of these 3 filings:
> SUMMARY
>
> In December 1998, P-Com, Inc. raised gross proceeds of $15 million
>through issuance and sale of 15,000 shares of a newly designated Series B
>preferred stock and warrants to purchase 1,242,257 shares of common stock. The
>Series B preferred stock converts into shares of common stock at variable rates
>based on future events and future trading prices. The warrants are subject to
>anti-dilution protections which may require additional issuances. The Series B
>preferred stock accrues a 6% premium per year, payable in cash or common stock
>at P-Com's option.
>
> The purchasers of the Series B preferred stock are the selling
>shareholders under the registration statement of which this prospectus is a
>part.
>
>
> Estimated Amount of Common Stock Approximate Percentage
>Selling Shareholder Beneficially Owned/1/ of Beneficial Ownership/2/
>---------------------------------------------------------------------------------------------------
>Marshall Capital Management, Inc. 1,118,030 2.3%
>---------------------------------------------------------------------------------------------------
>Castle Creek Technology Partners LLC 1,366,482 2.8%
>---------------------------------------------------------------------------------------------------
>Capital Ventures International 1,242,257 2.6%
>---------------------------------------------------------------------------------------------------
>(1) Issuable upon conversion of the Series B preferred stock and exercise of
>the warrants.
>
>(2) Based on the current market price of the shares as of March __ 1999.
>
>
> Subject to certain limitations, due to the variable conversion ratio, there
>is no limitation on the number of shares of common stock into which the Series B
>preferred stock can be converted. See "Description of Capital Stock--Series B
>preferred stock" and "Certain Factors Affecting the Company--Series B Preferred
>Stock Financing." As the market price of the common stock decreases, the number
>of shares issuable upon conversion of the Series B preferred stock increases.
>
The last of these 3 filings also included an interesting section
on the conversion price of this Series B preferred stock:
> Conversion Price. Each share of Series B preferred stock has a face
> ----------------
>value of $1,000 and is convertible at the election of the holder into shares of
>common stock. From and after June 21, 1999, upon sufficient notice, if the
>then-effective conversion price for the Series B preferred stock is less than
>$2.264025, instead of converting the Series B preferred stock into common stock
>upon a holder's request, we may elect to pay such holder the equivalent value of
>the common stock in cash. The conversion price of the Series B preferred stock
>is $6.0374 per share until May 14, 1999. Thereafter, the Series B preferred
>stock is convertible at the lower of
>
> . $6.0374 per share;
>
> . 105% of the average closing bid prices of our common stock for the 15
> consecutive trading days ending on May 14, 1999; and
>
> . 101% of the lowest average closing bid prices our common stock over
> any 3 consecutive days during the 15 consecutive day period ending on
> the day prior to the applicable conversion date.
>
> The following table sets forth the number of shares of common stock
>issuable upon conversion of the outstanding Series B preferred stock and
>percentage ownership that each represents assuming:
>
> . the market price of the common stock is 25%, 50%, 75% and 100% of the
> market price of the common stock on March 16, 1999, which was $8.625
> per share;
>
> . the variable conversion price feature of the preferred stock is in
> effect;
>
> . the maximum conversion prices of the preferred stock is not adjusted as
> provided in our certificate of incorporation or the amount of shares
> limited by the other transaction agreements;
>
> . that the P-Com does not elect to pay holders equivalent value of common
> stock in cash, if the conversion value is less than $2.264025;
>
> 17
>
>
> Percent of Series B
>Market Price Preferred Stock(1)
>----------------------------------------------------------
>s Underlying(2) (%)
>----------------------------------------------------------
> 25% ($2.16) [6,979,177] [15%]
>----------------------------------------------------------
> 50% ($4.31) [3,497,565] [7%]
>----------------------------------------------------------
> 75% ($6.47) [2,329,950] [5%]
>----------------------------------------------------------
> 100% (8.625) [1,746,763] [4%]
>----------------------------------------------------------
>
>(1) On March ____, 1999, there were _____ shares of common stock and 15,000 of
> Series B preferred stock outstanding.
>
>(2) If converted on March 17, 1999.
>
>(3) Limitations in the transaction agreements might preclude these percentage
> of beneficial ownership from being achieved.
>
> The conversion price is subject to adjustment if we have not achieved
>$10 million of written contractual commitments for sales of our point to
>multipoint products and services prior to March 24, 1999. In the event we do
>not obtain such commitments, the conversion price of 7,500 shares of the Series
>B preferred stock shall adjust to the lower of $6.0374 and 101% of the lowest
>average closing bid prices our common stock over any 3 consecutive days during
>the 15 consecutive day period ending prior to the applicable conversion date
>during the period from March 24, 1999 through May 14, 1999. In addition, the
>foregoing conversion price of the Series B preferred stock is subject to
>adjustment upon the occurrence of certain other events, including:
>
> . our failure to obtain in a timely manner stockholder approval to issue
> more than 20% of our common stock on conversion of the Series B preferred
> stock and exercise of the warrants issued in connection with the Series B
> preferred stock;
>
> . our failure to timely deliver common stock upon submission of a notice of
> conversion for the Series B preferred stock;
>
> . our failure to redeem the Series B preferred stock after providing to the
> holders of the Series B preferred stock a notice of redemption at our
> option;
>
> . our or any of our subsidiaries' public announcement of a merger or
> consolidation;
>
> . our issuance of common stock or securities convertible or exchangeable
> into common stock at a variable price per share or at a price per share
> less than a predetermined amount; and
>
> . the sale by George Roberts, Chief Executive Officer of the Company, or
> Michael Sophie, Chief Financial Officer of the Company, of securities at
> less than a predetermined per share price.
For more of PCOM's recent SEC filings, go to:
stocksite.com
Cheers,
Rob |
