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.

Gold/Mining/Energy : Harken Energy Corporation (HEC) -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (3062)	6/29/1998 10:49:00 PM
From: Ed Ajootian	Read Replies (1) \| Respond to of 5504

Zeev, Thanks for clearing this up. These securities are both "floorless" as you define that term. I believe the big difference between the situation with these securities and the other situations involving floorless securities that you may have run across is as follows. The market cap. of the floorless securities as a % of the total market cap of HEC stock is miniscule. I believe the Development Finance Agreements were for $25 mm, and the RGC deal was for $15 mm. With a total of $40 mm, this represents not even 8% of the entire market cap. of HEC stock. In the typical floorless preferred issue with an OTC BB company say, the market cap. of the floorless preferred is often greater than half the market cap. of the company prior to the issue. That is why those types of floorless securities can be so devastating, whereas HEC's floorless securities have about as much effect on HEC's stock price as a knat on an elephant's ass. Re: the recent $85 mm Euro convertible, IMO it would be wrong to assume that they would short "everytime the stock gets close to $6.50". They have never done such kind of trading for any of the prior Euro issues. Rather, the Euro's have patiently waited until the stock was at least 20% or so over the conversion price (i.e., $8 or so in this case) before starting to short against the box. BTW, this angle has me intrigued. Are you aware of any other situations out there where the company has recently issued a floorless security that is a significant % of the total market cap. of the company, and the stock is marginable? I'm in shorting frame of mind these days.