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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Pam who wrote (27889)	4/12/2005 10:54:42 AM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 60323

Pam, the interest rate on the convertible issue reflects not only the risk (from what amounts to an unsecured loan) but the low conversion rate. With the jury verdict having gone in favor of Lexar, there is a high probability that Lexar will eventually get enough cash to cover the interest rate payments, and meanwhile, the common shares may improve to the point where the preferred shares are converted. But even if the common shares stay low, the preferred shareholders have a nice dividend. If this were a great bargain for the preferred shareholders (a private placement not available to the public), I'd go out and buy Lexar common stock and share in the bounty. But I'm in no hurry. Art

To: Pam who wrote (27889)	4/12/2005 10:59:56 AM
From: broozer	Respond to of 60323

I disagree with you Art. This deal, seems to me, is in favor of the lenders and Lexar was in no position to bargain. The conversion price is low and carries a hefty interest rate. Pam - You are correct here.....the lenders have all the leverage in this transaction and used it to extract the best possible terms. The convert price has nothing to do with the future prospects of LEXR's share price, rather it has everything to do with the weak/desperate liquidity position that LEXR is in. If LEXR is taken out, it will certainly be above $6.68 and the lenders will make out very nicely for such a short holding period. Best, Broozer