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Biotech / Medical : PLSIA (Premier Laser Systems) -- Ignore unavailable to you. Want to Upgrade?

To: kvogel who wrote (1521)	4/2/1998 9:47:00 PM
From: Sr K	Read Replies (1) \| Respond to of 1773

I'm still lurking. When the premium was about 4/32 I was considering exercising to bump a non-marginable security into a marginable one, but I held off, sold some Z's at 3.375 to 3.75 and now I'm waiting for clarification on the method of calling the B warrants, and I've even bought some back this week. I think the expectations for Q4 are too high, but it could go either way. But, bottom line, the company thought the shares were worth $10 or more when they filed in 1996 for a secondary with R & R that never got off, and I still think $10 is an OK price. So even if they didn't hit the numbers for Q4 I expect there will be buyers and accumulators on bad news. The company obviously thinks they have something valuable enough to protect, not just the $30 m cash or $100 m if the Z's are called. I expect you all know about the defensive strategy put in place to thwart a creeping tender or any unfriendly offer that is not "fair". They could have had a disappointing quarter and want to protect if they pre-announce. Or, they could have had a great Q4 and expect that calling the Z's will lead to massive arbitrage driving the stock down from $13 or higher at the time of the call to $9.50 or so late in the 30-day call period. And they don't want someone or some company picking up 5 m shares (20% fully diluted) for just $50,000,000. They have their experts, but I don't think the arbitrage for the Z's will be as harsh as the one for the W's. The difference is that to get the stock high enough to allow a call will probably include either FDA approval for children, or significantly improving operations, or both, and the exercise will take a non-marginable security (as long as the stock is under $13) and result in a marginable one. To exercise for $8 you only have to put up $4 and even now the Z covers 2/3 of that. When the W's were called January 5, the marginable W plus $6.50 gave a share for $7.50 to $7.75 and a non-marginable Z. You had to put up $3.25 cash. The cash difference is enough that if the FDA action(s) or other fundamentals are in place, I don't expect the arbitrage downdraft to offset the short covering panic. $8 downside but $18 to $24 upside by 8/20/1999.