Don,
Perhaps you missed this as I haven't seen your favorable comments on it.
biz.yahoo.com
Lumenon Innovative Lightwave Technology, Inc. and
Noteholders Restructure Agreements
Amended Agreement Lowers and Fixes Conversion Price, Eliminates Warrants and
Certain Restrictive Covenants and Default Conditions
Great deal for the bond holders, yet another lousy deal for the other shareholders.
Bond holders give up:
(a) warrants for 5,000,800 shares which are hopelessly out of the money, and therefore not dilutive,
(b) conversion @ $7.00 for their remaining balance (i.e. 1,750,000 shares) also well out of the money, and
(c) certain covenants which restrict the company and, given the present state of operations probably have no real value
and they get conversion @ $1.44 for their balance (i.e. 8,507,000 shares, a net increase of 1,756,200 shares), a price near enough to market to allow them to work the position out through shorts against the box as they have done for their previously converted holdings.
Given the prospects of their debt actually being repaid out of operations this is a wonderful deal for them.
The management is freed up from the anti dilution covenant of the bonds, permitting them to sell more shares at current prices.
And the shareholders' yachts remain grounded on the reefs of promotion.
Fred McCutcheon
Wednesday October 10, 1:38 pm Eastern Time
Press Release
SOURCE: Lumenon Innovative Lightwave Technology, Inc.
ST-LAURENT, Quebec--(BUSINESS WIRE)--October 10, 2001-- Lumenon Innovative Lightwave
Technology, Inc. (NASDAQ NM: LUMM - news), a manufacturer of high-quality optical devices
for global technology, data communications and cable markets, announced today that it has
restructured its convertible noteholder agreements with certain of its institutional investors.
Under the terms of the amended agreements, the conversion price of the notes is now fixed at $1.44.
In addition, five-year common stock warrants for 5,000,800 shares of common stock, provided to the
investors under the original agreement, were canceled in their entirety and certain restrictive
covenants and default conditions were eliminated.
The original agreements, completed in July 2000, were for $35 million in 7.5 percent, interest
bearing, five-year notes convertible into Lumenon common stock at a conversion price based on the
closing bid price for the five days prior to conversion, with a ceiling of US$25 and a floor of US$7.
As of June 30, 2001, US$12,250,000 of the gross principal amount remained outstanding.
In announcing the amended agreements, Gary S. Moskovitz, President and Chief Executive Officer
of Lumenon, said, ``We believe the amended agreements reflect the noteholders' positive views of
our recent progress and a strong support for the future of our company. We believe that their
willingness to restructure the agreements, including by eliminating certain restrictive covenants and
default conditions, will benefit Lumenon and its shareholders.
``Additionally, the cancellation of the warrants will eliminate potential significant dilution for
existing shareholders. We anticipate that the overall amended financing structure will allow us to seek
future financing at attractive terms.'' |
