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Biotech / Medical : Elan Corporation, plc (ELN) -- Ignore unavailable to you. Want to Upgrade?

To: fred hayes who wrote (3470)	10/31/2002 3:36:53 PM
From: Robohogs	Read Replies (1) \| Respond to of 10345

Given how this thing has fallen, I have stopped paying as close attention. But assuming your valuation is close to correct, let's assume worst case with respect to timing. If the LYONs are forced to convert into stock with the stock at $1, the LYONs would get just under 25% of the stock. The debt would not have to be paid back in cash so that the equity value would increase by $1 B. This means you would have about $3.2 B for the equity (rounding to make easy), implying $0.8 B for old equity or about $2-2.50 per share. Now, if the same facts happen but they buy only half of the LYONs with stock and half with cash, then you end up with $2.7 B in equity value, old shareholders owning 40% of stock for $1.1 B of value or about $3 per share. Meanwhile, I would be willing to bet many of these funds do not want to have to sell shares in ELN if LYONs were paid in stock. They would likely be willing to settle for something like $0.65-0.80 on the dollar in cash. Just my two cents. Jon