Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Floorless Preferred Stock/Debenture -- Ignore unavailable to you. Want to Upgrade?

To: Larry Brubaker who wrote (914)	8/29/1999 9:59:00 PM
From: mst2000	Respond to of 1438

Larry - Thanks for the explanation. With your explanation and Zeev's, I can assure you that I am less ignorant than I was in the "mechanics" of this particular type of hedging activity for a floorless conversion. I suppose this would militate in favor of Glen Rose establishing its short position (assuming it were to do so) in about 6 months, when the issue truly becomes floorless, rather than letting the market absorb it in the short term. So how ATG is performing at that time would be pretty important, maybe even more so than how they do between now and then. Before then, is it unlikely that they establish the hedge (so as to not give up the potential of greater upside in favor of shorting when there is still a floor), or is it still completely in their interest to hedge? BTW - the Securities Purchase Agreement between Rose Glen and ATG (from the 8K) provides in Section 4.l: "Buyers shall conduct sales of Common Stock in compliance with all applicable federal and state securities laws and rules or regulations promulgated thereunder. Buyers will not under any circumstances create any daily low trading prices in the Common Stock or conduct sales in a manner intended to manipulate the Common Stock Price. Prior to the Closing Date, the Buyer will not establish any long or short position in the Common Stock." No specific authorization for taking a short position after the Closing Date, but no prohibition either (whereas it was prohibited prior to the Closing - which I interpret to be 8/17/99). And some fairly explicit anti-manipulation provisions that would be food for thought for any party adopting an aggressive strategy to improve the conversion ration at the expense of the value of the Company. Anyway, thanks for the explanation, which was very lucid and helpful. I suppose I should take solace from the fact that ATG has built a 2 million plus share short position over the past 3 months without tanking. I still think aggressive trading strategies (and even certain technicals) are trumped by especially good financial performance and developments that strike very positive chords within the public markets. Is it perhaps the case that, rather than as a financing of last resort predicated on unpredictable dilution down the road, ATG decided that the chances of maintaining a 10-plus stock price (or a lot more than that) over the next 6-12 months (and after that) were so high enough that the "floorless" aspects of this financing simply do not concern them? Ah, just more grist for the mill. MST