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Non-Tech : Radica Games (RADA) -- Ignore unavailable to you. Want to Upgrade?

To: chaz who wrote (3246)	3/5/1998 10:31:00 AM
From: Hank	Read Replies (1) \| Respond to of 7111

Chaz, Regarding convertibles, they are almost always dilutive to a stock. Typically, a company will sell prefered stock to investors that is convertable to common shares at a specified date. If the convertible deal has a floor, then the value of the common stock at conversion is given a minimum value. If it is floorless, then the preferred stock will be converted to common stock at whatever fair market price is at the time of conversion. The problem is that the investors who receive these convertable preferred shares will often short the stock in the hopes of driving the price down to whatever the conversion price is and then use the common shares to cover upon conversion. This is obviously worse in a floorless deal where the object is to short the stock to as low a price as possible. I'm not familiar with the CYMI deal, so I don't know what type of convertable deal was involved. Hank