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To: iknowlarry who wrote (883)	7/2/2000 5:25:35 PM
From: Carl R.	Read Replies (1) \| Respond to of 937

You are correct that the financing deal could prohibit shorting for some period. From where we sit, there is no way for us to know, however. As for the stock running, if you go back and look at my example, the preferred buyer does the worst if the stock sits exactly at 20% over the average price (i.e. the conversion price, which in my example was 18). Above that price he loses money on his short position, but gains a bigger profit on the warrants that come with the preferred. Thus his optimal outcome would be for the stock to run, and the second best alternative would be for the stock to fall significantly. This actually presents a way for him to increase his no-risk profit because he can then sell both puts and calls against his position, increasing his fixed profit, and eliminating any benefit from the stock rising or falling. Carl