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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: Greg McDaniel who wrote (13162)	7/17/1999 10:09:00 AM
From: Chisy	Respond to of 27311

LOL, maybe we should chart personal attacks. <<ggg>>

To: Greg McDaniel who wrote (13162)	7/17/1999 11:52:00 AM
From: Larry Brubaker	Read Replies (2) \| Respond to of 27311

Greg, I don't think there is anything magical about the 27th. It is only the first day of a 4 year window for a variable rate conversion. I doubt whether we will see an immediate plunge into a death spiral, even if there is no material announcement by then. Particularly since Castle Creek is prohibited from shorting more than 30,000 shares per day or 15% of the volume, whichever is greater. I think the most immediate implication of the impending variable rate conversion is that (if not removed) it will make it even more difficult for VLNC to raise more money. I'd guess a potential Daddy Warbucks will be somewhat hesistant to invest a substantial amount of money at a fixed price, unless that fixed price is at a substantial discount to the market price. And if they sell convertible securities, Castle Creek has the "most favored nation" clause allowing the terms of their deal to be reset to ensure they get a better deal. Therefore, I think we might see more of the small fixed price financings at a discount to the market price, like the last one. My opinion is that the amount of the previous sale was small because the Warbucks was not a long-term investor. He was willing to risk a smaller amount in return for an easy profit on the $3 million (remember the block sales that were taking place during the pre-conference call runup?). We could see more of the same. If they have to continually dribble out small financings at a discount to the market, I'd guess the price will slowly weaken rather than plunge into a death spiral. All of this, assumes that VLNC is not close to signing a material order of any size (as their SEC filings indicate). A material order of any size, or the perception that one is imminent by a potential Daddy Warbucks, could render this pessimistic scenario moot.