Bill, where have you been? The floorless debentures (and preferred shares) are the new inventions of the wunderkids on the street. It is a financial instrument convertible into stock, typically at a preset discount to a trailing average of the stock. Thus it provides the holder a golden opportunity, if he is so inclined, and if the size of the debenture is large relative to the normal trading and to capitalization, to short the stock against the block and into oblivion. His shorting causes pressure on the price, which then makes his instrument capable of backing a larger short position which generates more shorting and you get a death spiral.
There is a "floorless" thread on SI, and I believe that in one of the first few posts on that thread, I gave a generalized scenario.
By the way, VLNC is a nice thread, and the term floorless is avoided in "nice" and in mixed company, but since you are new to this thread, I think that you'll be forgiven.
Zeev |
