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

To: Dennis V. who wrote (14526)	9/12/1999 11:54:00 AM
From: Larry Brubaker	Read Replies (1) \| Respond to of 27311

Dennis, companies resort to variable rate convertible financing because they have no other source of raising capital. It allows the company to continue when the ultimate Darwinistic outcome, bankruptcy, is the only other alternative. Some (e.g., ANCR) survive and prosper after the floorless bandits exact their pound of flesh. Many others simply delayed the inevitable. If a mistake was made when VLNC did their deal, the mistake was by Berg. I'd guess VLNC looked for more favorable financing terms before they went to Castle Creek and variable conversion financing. While Berg gave them a $7.5 million loan commitment a year ago, he also allowed them to sign a floorless deal. I have pondered many times why Berg would allow them to do a floorless deal if he is so darned eager to continue sinking money into VLNC. However, from his perspective, it allowed him to pick up a boatload of shares in the low $3s a year ago. And now more in the low $6's and possibly more in the low $4s. Would he have had this opportunity if VLNC had sold shares at a fixed rate a year ago? Maybe he didn't make a mistake after all?