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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: T. Ambrose who wrote (8584)	6/23/1999 4:38:00 PM
From: Joe Copia	Read Replies (1) \| Respond to of 57584

It's a bad deal for shareholders.

To: T. Ambrose who wrote (8584)	6/24/1999 8:51:00 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 57584

T. The news release indicates to me that the debenture is floorless, namely the conversion price declines with the price of the stock. Yes, the company has the option to pay in cash, but for that they'll need money which they apparently do not have. Why replace a line of bank debt with a floorless is beyond my understanding. Mind you, I know nothing about the company and its prospects, but my experience has been that 19 times out of 20, a floorless convertible is a disaster waiting to happen, and the stock can decline at least by 50%, I have seen many cases where the eventual decline was more than 90% and few cases where such a floorless was a sign of the impending demise of the company. Cases you may want to study include: CHTL, EXSO, TSIG, TTRIF, HAYS, AKSEF, HEC, RNTK, GATE, ANCR (they survived and flourished after buying back the floorless), IELSF, and many more. Zeev