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Microcap & Penny Stocks : KAFE (Country Star Restaurants) -- Ignore unavailable to you. Want to Upgrade?

To: david m. uhler who wrote (703)	2/26/1998 2:04:00 PM
From: Zeev Hed	Respond to of 876

David, I do not see anything onerous about the AOL convertible debentures, these are Ceiling and ceiling less (in case of change of ownership) convertible. The ceiling is conversion at $104/share or so, and if ownership (acquisition) of AOL, at the option of AOL these can be converted at the trailing 5 days average (95% of that average), which AOL assumes might be higher. The debenture holders are getting a low interest rate (4%) and have a call on the company stock for four years at 104. This is a very good deal for AOL and also a fair deal (at current market prices) for the bond holders. But they do have to put the money up. Now, the bond holders can arbitrage against the debenture (selling short at current prices, $125 since they know they can always deliver the stock), but this will not create a spiral down since if the price goes under 104, it will make sense for those arbitrageurs to cash in their chips. Zeev