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Biotech / Medical : ARIAD Pharmaceuticals -- Ignore unavailable to you. Want to Upgrade?

To: scaram(o)uche who wrote (732)	10/12/1999 4:18:00 PM
From: Biomaven	Respond to of 4474

If you are both short 5k and long 5k then your beneficial ownership is zero - you are "short against the box." You deliver the shares you get from converting to cover your short and end up with nothing. Now I'm not saying there aren't some timing issues - if they try to convert more than 5% at once then ARIA might conceivably squawk and decline to recognize that there is an offsetting short position. They could try converting a million shares a day for eight days, explaining they already sold yesterday's shares (which of course wouldn't have been delivered yet). Maybe ARIA will try to redeem some of the convertible instead. As I understand it on a cursory reading, they have to deliver the same dollar value as if the holders sell it themselves, but it will stop umpteen million shares (maybe 8 million) being dumped on the market in the next few weeks. (Even the company-forced redemption clause in this agreement is worse than is usual in these deals - they really got taken to the cleaners in this toxic). Bottom line, though, is that the stock is likely to be on sale for the next week or two until the conversion process is finished. It might drag on for a little longer if the preferred holders decide to be brave and hold some of their shares for a bit, hoping to sell them later - they can't do this with more than 5%, though. Peter