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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: vegetarian who wrote (1851)	1/29/1998 10:00:00 AM
From: Roger A. Babb	Respond to of 18691

M Carter, Thanks I will look at TERA

To: vegetarian who wrote (1851)	1/29/1998 10:33:00 AM
From: Hank	Respond to of 18691

There's a monkey wrench in this scenario regarding TERA. They start trading options on this Friday with March strike prices around 10, 12, and 15. This means that there is now good reason for current shareholders to maintain the stock price within this range. You may get a drop of a point or two right now but I don't see the big one coming until after March expiration.

To: vegetarian who wrote (1851)	1/29/1998 8:55:00 PM
From: telebob	Read Replies (1) \| Respond to of 18691

TERA short - whose behind the stock ? what investment house promotes this company ? who did the private placement? any idea?

To: vegetarian who wrote (1851)	1/30/1998 10:36:00 AM
From: posthumousone	Read Replies (2) \| Respond to of 18691

hi--------what is meant by floorless convertable? i was very confused about the private placement as to whether it was bullsih or bearish....here is my analysis of the filing......does it make sense.... Essentially TERA got 9 million from investors who will get back about 10 million or a "guaranteed 10%" Calculations: Sold 10,000 shares of preferred stock for 9 million: Each share of Preferred Stock is convertible into the number of shares of Common Stock equal to the quotient obtained by dividing: (a) the sum of (i) $1,000, (ii) accrued and unpaid dividends and (iii) accrued and unpaid interest on dividends by (b) the lower of (i) $19.185 per share or (ii) the lowest sale price (regular way) during the five consecutive trading days ending the day immediately before the Company receives the notice of conversion. (i have know idea how to estimate the accrued and unpaid dividends.....lets be ultra conservative and say 0- you'll understand why 0 the lower number you use for assuming dividends the more conservative your answer) 1 preferred share = (1000 + 0)/19.18 = 52.13 shares or 1 preferred share = (1000 + 0)/(lets use $13) = 76.9 shares 10,000 * 52.13 = 521,376 shares 10,000 * 76.9 = 769,000 shares therefore if the price is above $19.18 they will have 521,376 shares that they essentially paid $9 million for so 9,000,000/521,376 = $ 17.26 per share for a nice return of 11% if they convert at a price of $13 they will have 769,000 shares that they essentially paid $9 million for so 9,000,000/769,000 = $11.7 per share for a nice return of 11% assuming they sell at 13 In other words they gave TERA 9 million for a guaranteed minumum of 10%!!!!!! In addition TERA gave them a little bonus with the warrants....... 125,000 exerciseable at 19.18......that is included in the 9 million price so if the price is below 19.18, big deal no loss its a freebie......for every $1 above 19.18 the investor makes an additional $125,000 BUT the company is only allowing 1,367,499 shares via private placement so the lowest the price can go to exercise all at once would be $7.35: 1 preferred share = (1000 + 0)/(lets use $7.35) = 136 shares 10,000 * 136 = 1,360,000 shares if you read it closely it gives the investors the right to Short the stock on the open market and then buy back with their converted common shares wow lets short this to $8 buy back with converted shares and make $ on both ends!!!!!!! remember if the stock trades: 14 13 13.5 14 15 the investors get the low price over that 5 day period!!! So how desperate was TERA for $ ??? Are hopes, look back at our old messages, were for TERA to deliever a product, and have an order thereby pushing the stock over $20 - Salomon would step in do a secondary offering of a million shares at $20....raise $20 million for the TERA to get production cranking and..............it raises less than 1/2 that with greater dilution Just "trying" to get a feeling of how the private placement is structured, works and how it can effect the shareholders.....maybe someone with more experience can help out???????? oh did you forget the 2 million options that can be exercised at 1.75? talk about dilution......the company gets what 2*1.75 million ??? Now run Salomons model using 13.5 million shares outstanding in 2000E and see what EPS you come up with .... ouch

To: vegetarian who wrote (1851)	2/1/1998 4:55:00 PM
From: CJ Quantumwell	Read Replies (1) \| Respond to of 18691

Hi M Carter, TERA also had two more floorless financing before this $9.5M one. ( Three times on 1997, $4.1 in March, $5M in Sept and $9.5M in Dec. I found the previous two were purchased by one or two investors only. ( haven't found how many investors in the Dec one yet) How will you interprete this? I think selling to one or two is much better than to lots of retail investors. At least, some individuals are willing to take four or five millions dollars risk. In general, we should not expect price rise after those bad financings. However, TERA didn't drop too much in April and was elevated to much higher ground in Oct. It seems that a report by Soloman in Sept really lifted up this stock. On the surface, I could see TERA keep diluting the shares and spent money like crazy. How could we know when the support ( from Soloman ?? or ??) will go away? CJ