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Biotech / Medical : Biotech vs. Shorts -- Ignore unavailable to you. Want to Upgrade?

To: Pseudo Biologist who wrote (125)	8/10/1999 6:51:00 AM
From: LLCF	Read Replies (1) \| Respond to of 427

NO, very informative... this article certainly makes it look as though these 'death spirals' had at least a partially up and up beginning. H&Q involved... at first they must have just thought up the floating strike price to protect the preferred holder from a falling stock price! Wow, I stand corrected.. hard to believe from the structure that they may have had an innocuous beginning, it's so beautifully evil!! In any case... the cat is out of the bag now, and the most unsavory characters clearly involved. Wish I hadn't seen this: "Nonetheless, the deal provided the company with cash at a time when it needed it and lacked other financing prospects. In recent years, similar private issues of what is known as floating convertible preferred stock have raised hundreds of millions of dollars for companies unable to go a more traditional financing route." Yea, right! Doesn't provide the shareholders with much cash does it!? This is interesting from Quarter Deck: <Karkenny, however, was careful not to give any discounts. In the first deal, the conversion price was based on a 45-day volume-weighted average. In the second, the conversion price was the average of the three low trades of the 22-day period prior to conversion. The no-discount policy, Karkenny believes, attracted a different breed of investor for Quarterdeck.> These are radically different... the first is fantastic for the company compared to the second... bad boys can't just continue to knock bids out at the end of the day... volume counts! I can't believe he's not stating this... the second looks terrible, although he's right, there is no discount. Maybe this is why he's touting the idea: <Chris Karkenny, who was Quarterdeck's treasurer at the time of both issues but is now a partner at Anaheim, Calif.based Unique Investment, a leveraged buyout firm, describes the financing as a good alternative to debt. "Additional debt can bring your equity level too low," he says, "and a typical convertible preferred is treated as debt because there is an attached coupon." But because the Quarterdeck issues had no coupon, the company was able to treat them as equity on its balance sheet.> NOW HE's ON THE DARK SIDE!!!!!!! -g?- DAK