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.

Technology Stocks : The New QLogic (ANCR) -- Ignore unavailable to you. Want to Upgrade?

To: Eleder2020 who wrote (14559)	2/19/1998 11:48:00 PM
From: Greg Hull	Read Replies (1) \| Respond to of 29386

Dumb question: This round of financing is being referred to as Series C. The last round is referred to as Series B. Is this because they are different forms of financing, or is this just a sequential reference? TIA, Greg

To: Eleder2020 who wrote (14559)	2/20/1998 1:47:00 AM
From: Jay Quinty	Read Replies (2) \| Respond to of 29386

Ed, I'm no expert, but I've spent some time recently familiarizing myself with the Reg D deal done last year, and it's likely it will be the same with the Series C offering. Here's how it goes: In the Reg D, the investors ponied up the $8.5M up front. For this they receive 5% during the time that they hold the convertible, and then get the opportunity to convert the shares at a later date and get much more. The minimum they will get is 15%, on top of the 5% coupon on the preferred (explanation to come). The conversion price is based on the closing price of five or ten days prior to the closing of the financing, or at a discount to the closing price on the day of conversion. Bear with me, I'll try to explain. In last year's Reg D, the conversion price was set at $4.85 (I'm going from memory here so give me some leeway on the exact figures), or 85% of the price of the stock on the date of conversion, whichever is less. So lets say ANCR's market price is $8.00 on the day the Saudi Prince wants to convert. He gets to convert his shares at $4.85, and immediately sell them for $8.00 on the open market. A tidy little gain. If, however, the market price for ANCR is $3.00 on the day he wants to convert, his conversion price is $3.00 times 85%, or $2.55, and he can sell them immediately for $3.00 on the open market. He still makes 15% on his investment. From what I can tell, the Series C is a similar type of situation. I'm listening to the cc right now and Ken said that if ANCR's stock price is flat or down, at say $8 or $5, then the conversion price is $8, or $5. On the upside, it sounds like the conversion price is going to be fixed to some number to be determined in the next 30 days (between $9 and $13). So, if the price of ANCR averages say $10 over the next 30 days(fingers crossed), then the conversion price will be a maximum of $10. The encouraging thing about this is that there are only 3 investors in this Series C, and they're all individuals who participated in the Series B, but HAVE NOT converted. IMO, this greatly reduces the likely of any shenanigans(read drop) on the stock price prior to conversion. Thats all for now, Jay