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To: CIMA who wrote (69762)	11/4/2000 6:09:12 PM
From: ChrisJP	Respond to of 150070

Hi CIMA, regarding floorless convertible, or death-spiral, financing: The article you cited didn't explain them as well as it could have. Typically, the SEC filing that mentions the financing terms will state the conversion can occur at the bid price. Sometimes even something like 80% of the bid price. So what the lender does is use the future conversion shares as collateral -- and then starts shorting the stock every day. Then what happens is instead of covering (which would result in buying), the lender simply performs the conversion, and covers with the converted shares !! The lender makes a nice percentage gain in about 6 months, absolutely risk free. Mean while the current shareholders get screwed. There's even a thread on SI about the subject: Subject 19082 I think I saw financing terms in a filing of AQCI's that sounded floorless to me. Message 14283085 Regards, Chris