To: Lawrence Burg who wrote (7111 ) 8/13/1998 9:25:00 AM From: John S. Baker Read Replies (4) | Respond to
Might well be a bullish move, or it could be the results of an arbitration play based on shorting the common, knowing that you can cover at any time by converting your preferred.I think that's a "no", as the share quantities are fixed. A real floorless would have the draw in a fixed dollar amount. That way $1M of stock buys more and more shares as the price drops, creating an incentive to short. We might be quibbling a bit over the definition of floorless here, but the very real effect is that the holder of PrA would benefit from being able to convert when the stock is trading at a lower price than at a higher one. Since that appears to be true, it would be theoretically possible for a holder of PrA to sell short in order to intentionally bring the price down, knowing full well that he had virtually no risk because he could cover using shares he owns. Sort of like a "covered short"<g>.The Series A Preferred Stock pays a dividend of 9% per year and is convertible over 18 months into common stock at the lesser of the average closing bid price of the common stock for the five trading days preceding the sale of the preferred shares, or at 82.5% of the average closing bid for the five trading days preceding the conversion of the Series A Preferred Stock into common stock.
