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.

Strategies & Market Trends : Floorless Preferred Stock/Debenture -- Ignore unavailable to you. Want to Upgrade?

To: Mama Bear who wrote (148)	10/11/1998 8:33:00 PM
From: N. Dixon	Read Replies (2) \| Respond to of 1438

<<You have stated that REFR has bought back enough shares to cover the B warrants. Where did you find that information?>> They have an authorization from the BOD to buy 330,000. They have stated they are buying aggressively (see Aug. 13 announcement). I don't have the exact number they have bought. Check with Pat Bryant at 1-888-773-7337. She would have that information. I have explained why they filed the S-3 and see no discrepancy or problem with REFR buying shares in the $5-6 range and then putting them to Ailouros at a later time of REFR's choosing at any price up to $15. My guess would be they would put the stock to Ailouros for more than the current price they are paying. They don't need working capital at this time and they have licensees in pre-commercialization stages so most likely they will have income way before their current cash reserves run out. <<They may not set a floor of 15 and force Ailorous to buy at that price unless the stock is over $16.31. Ailorous has the option to refuse.> They may set the floor at $15 and Ailouros can buy or not buy. The important thing is that REFR sets the floor. So there is NO WAY Ailouros can FORCE them to sell stock for any less than REFR chooses. So there is NO WAY they can force dilution nor is there any evidence that REFR will EVER sell for less than the current price. This makes it impossible to support a "floorless convertible" analogy. It also makes you wonder why Ailouros would agree to these terms. I think it is because in their due diligence they realized that even if they had to pay $15 a share, it would be a bargain. Evidently they saw no problem in paying $8.25 a share for 65,500 of the Class B warrants with a potential of another 65,500 at the same price. That hardly seems smart if they don't expect REFR to be successful. Basically those shares are the ONLY shares they are guaranteed in this agreement. So this is a GOOD deal not a bad one for the shareholders. That was the point I was trying to get across. ND