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Technology Stocks : Ampex Corporation (AEXCA) -- Ignore unavailable to you. Want to Upgrade?

To: Sam Sara who wrote (9553)	6/26/1999 2:25:00 PM
From: Michael Olds	Respond to of 17679

I dont see the wizes answering, so I'll give it a poke: Here is the language: Each share of Convertible Preferred Stock may be converted, at the option of the holder thereof, into 500 shares of Class A Stock, subject to adjustment under certain circumstances. [splits, etc.] Beginning in June 2001, the Company will become obligated to redeem the Convertible Preferred Stock in quarterly installments until March 2008. The Company will also be obligated to redeem the Redeemable preferred Stock in quarterly installments from June 1999 until December 2008. The Company will have the option to redeem the Redeemable Preferred Stock at any time And the Convertible Preferred Stock beginning in June 2001, The difference is that the Convertable is convertable at a set number of shares per convertable share; whereas the Redeemable is convertable at the value of a set amount of dollars per redeemable share. I was looking at the action in the last couple of weeks when the techs were getting hammered, and thinking the same thought: ?have we become a "safe haven" stock!

To: Sam Sara who wrote (9553)	6/26/1999 3:27:00 PM
From: Hal Campbell	Read Replies (1) \| Respond to of 17679

To add a little to Mike's explanation, David. the differences are in the way each class is treated. The 3 mil. shares have already been issued. Each share of the convertibles could be converted at the holders option into 500 shares of common at any of 4 or above. 10,000 x 500 x 4 equals 20 million. Most have already been converted ...by Fidelity et al...many sold...many still held. The redeemables follow a different schedule ...as Mike said. They will either be gradually filtered into the float ( or paid for in cash) over time-- quarterly installments - or redeemed at the company's option if ever they so choose. ( a likely course if the stock price ever gets high enough to justify it). This deal replaces a structure in which , the moment they achieved positive book value, AXC would have had to dedicate any and all profits to repayment of 72+ million in debt. Bought time and flexibility. ( in an ingenious fashion in my opinion ). Again ( there have been MANY posts on this headache of a topic) if they succeed in their business efforts ...and the stock then rises sharply - and it will if they succeed - this debt will be about meaningless. If they don't, it will become an increasingly pesky problem. Simple as that.

To: Sam Sara who wrote (9553)	6/27/1999 7:44:00 PM
From: Carl R.	Read Replies (1) \| Respond to of 17679

I've been out of town, and I see that Michael and Hal have given some good answers to your questions, but I'll throw in a few tidbits: The convertible preferred can be converted at any time by the holder and the conversion price is fixed at 4. If you held the convertible you could 1) convert and sell the stock, presumably when the price is above 4, 2) short the stock (again, presumably when the stock is above 4) and continue to hold the convertible just in case preferred dividends are declared, 3) Convert and hold the common, or 4) Continue to hold the preferred until AXC liquidates it at face value, but this only makes sense if the price is under $4. The redeemable issue is much different. If you hold it, all you can do is hold it and wait to see what happens. It is Ampex that has choices. They must redeem the preferred (i.e. buy it back at face value). They can redeem in cash, or in stock, and if in stock at the higher of $2.50 or face value. If the stock is under $2.50, it would seem logical to redeem with stock at $2.50. Above $2.50 they could use either stock or cash. The trick is that if they use stock, the price is not fixed. This can create an incentive for the holder to short the stock prior to the redemption date because if he can drive down the stock price, he gets more shares. Worse, the market could anticipate this happening, and traders could join in, selling the stock a month before the redemption date, and buying immediately thereafter. Thus even if the actual effect to too weak to do anything to the stock price it is still possible that the effect could happen anyway as traders jump on the bandwagon. As for risk, I don't think that the redeemable is a significant additional risk factor at this time. Carl