Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Wallace Rivers who wrote (17515)	8/5/2003 12:25:48 PM
From: richardred	Respond to of 78745

True dilution, but for investor confidence in the future, a plus. IMO-The dividend might even hold with the new financing in place. A bonus waiting for the recovery. The company invested for the future, but the economy tanked. I can't fault them for that. It makes them a leader when thing get better. Eastman is in the same boat. If you notice Eastman Chem. Their earnings were down for the quarter, below expectations, but the stock was up. I think Paul is on the right track here. IMO- A good value for bottom fishing. It would be great if they could find a new market for their plastics. Maybe a composite wood replacement such as Trex uses. RR

To: Wallace Rivers who wrote (17515)	8/5/2003 12:31:25 PM
From: Brinks	Read Replies (1) \| Respond to of 78745

"According to those posts, the conversion price slides down were certain price targets not to be met. I don't like deals like this, to me it hints that the company is finding it difficult to obtain "conventional" financing." I was just studying the May 27, 2003 proxy for Wellman. Although this is not a "floorless" preferred financing the floor on the preferred is $ 6.75 versus initial conversion price of $ 11.25 (40% difference). This represents a deep discount. This preferred has a lot of teeth and hair (Preferred has accretion factor meaning dividends not paid in cash are added to liquidation and conversion preference). On pro forma basis book value would have been diluted from $ 13.39 to $ 12.75 had the preferred been converted on 12/31/02. One wonders about the timing of such a financing. Hats off to Warburg Pincus who could own 48.9 % of the company at the end of five years for approximately $ 125 million investment.