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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Mark Konrad who wrote (52609)	6/23/2001 11:49:43 PM
From: Mark Konrad	Read Replies (1) \| Respond to of 57584

IFCI...potential landmine-in-the-making, imo. From yesterday's news release: "Additionally, the company completed the private placement of $10 million of Series D Convertible Preferred Stock to Crescent International Ltd., an investment company managed by GreenLight (Switzerland) SA, and warrants exercisable to purchase 509,554 shares of common stock at a price of $5.89 per share for a five-year term. The Series D Preferred is convertible into common stock at the lower of $5 per share *or the average of the five lowest consecutive closing prices of the common stock for the 22 days preceding the conversion date.(emphasis mine--MK--) Crescent also agreed to purchase up to $10 million of common stock of the company in increments of between $200,000 and $2.5 million at the discretion of the company during the 18-month commitment period. The purchase price of the common stock under this commitment will be equal to the average of the three lowest consecutive closing prices during the 22 days preceding the sale.*(emphasis mine again--MK--) The company agreed to provide registration rights to Crescent in connection with the placement." At first glance this appears to me to be a "floorless" convertible which can encourage a "death spiral" in the price of a stock. The debenture holders can buy more shares if the stock is driven down (there is no "floor" or minimum price at which the conversion can take place). Somebody please correct me if I'm wrong here but this looks like one to avoid or sell short if possible--MK--