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Strategies & Market Trends : Floorless Preferred Stock/Debenture -- Ignore unavailable to you. Want to Upgrade?

To: BDR who wrote (1327)	11/3/2001 1:40:22 AM
From: Larry Brubaker	Read Replies (1) \| Respond to of 1438

By definition, a floorless is a deal in which there is no floor on the purchase price. I see no mention of a floor, therefore, it is most likely floorless. Since this is structured as an equity line of credit (i.e., the financing is placed in increments rather than all at once), it appears to be what Zeev would refer to as a "leaky floorless." Not quite as bad as a pure floorless in that the company decides when the placements are made (presumably they will try to time the placements for when the stock is trading at a relatively high price), but it is still junk equity.

To: BDR who wrote (1327)	11/3/2001 10:39:36 AM
From: Dale Baker	Read Replies (1) \| Respond to of 1438

Looks like they put in provisions to undermine any effort to gain the usual benefits of a floorless, i.e. getting more shares by driving down the price: In general, the drawdown facility operates as follows: at our sole discretion and from time to time over the course of 18 months, we may make unlimited drawdown requests, pursuant to which the investor, Ballsbridge, is obligated to purchase up to an aggregate of $10 million of our common stock. The amount we can draw at each request must be at least $100,000. The maximum amount we can actually draw for each request is also limited to the lesser of $2,000,000 and 20% of the volume weighted average price of our common stock multiplied by the average daily trading volume multiplied by the number of trading days in the applicable drawdown period. We are under no obligation to request a drawdown during any period or, in the absence of such a request, to issue any shares to Ballsbridge. If, on any day during the drawdown period, the average volume-weighted price of our common stock drops below the minimum threshold price that we specify in the drawdown request, that day will be excluded from the relevant settlement and the aggregate amount of our drawdown request will be reduced accordingly.