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

To: Roger A. Babb who wrote (1379)	2/22/2002 12:22:42 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 1438

That looks like a floorless alright, I thin AES claimed that there was "no recourse" to those shares. In any event, those capital intensive outfits are not really my game.... Zeev

To: Roger A. Babb who wrote (1379)	3/29/2002 3:31:43 AM
From: Bob Rudd	Read Replies (1) \| Respond to of 1438

AES SELLS featured in NYT Floyd Norris peice today entitled, "They Had Fun, Fun, Fun Till the Stock Fell" nytimes.com [Free signup required] Excerpt: "secured equity-linked loans." At the end of last year, it owed $650 million on such loans, with $350 million due in 2003 and the rest in 2004. The company carries them as "nonrecourse loans" on its balance sheet, figuring that it doesn't need cash to pay the loans, only stock. And there's the rub. At yesterday's $9 share price, AES would have to issue 72 million shares to repay the loans. That equals 13 percent of the shares already outstanding. In other words, this financing strategy could cause substantial dilution for shareholders who are already suffering. And the dilution worsens as the share price declines. At $3.40, a level AES reached last month, it would have to issue 191 million shares, a 35 percent dilution.