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Technology Stocks : Micron Only Forum
MU 225.89-1.1%3:59 PM EST
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To: tom rusnak who wrote (45881)5/19/1999 8:36:00 PM
From: John Graybill  Read Replies (1) of 53903
 
Late June / early July is the period. MU issued about $500M in convertible 7% bonds in 6/97 (SEC filing here: edgar-online.com. There was a clause in there that allowed them to defer payment of the interest for up to two years, and that would be 7/99.

The bonds had a conversion price of $67.44, which means that they could have been converted into stock for a profit earlier this year when MU went to 80. I don't know if the deferred interest up to that point just goes away on a bond that gets converted or not. I also don't know if MU could have forced a conversion. If it hasn't, then MU has to pay up to 7%/yr x $500M x 2 yrs = $70M in order not to be in default.

But we have seen many times before, in other companies, that big-money borrowers can BS/shmooze their bankers so they aren't labeled "in default". And nobody's better at BS'ing than MU.

The interesting part will be how MU tells the bond holders, "we stiffed you for two years and we're gonna keep doing it, suckers!" They need to spin that into "we're doing great, and we'll make it worth your while to trust us with your money a little longer" or "we're paying your interest from the TXN and INTC investments, and we can muddy the financial waters enough that you can't prove that that means we're just running a giant Ponzi scheme"

Re today's market action, I haven't seen a day of bell-to-bell whipsaw like that in a while. I'm gonna assume that the first decent move after expiration is a fake.
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