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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: FMK who wrote (5060)	11/14/1998 10:24:00 PM
From: Larry Brubaker	Read Replies (4) \| Respond to of 27311

FMK: I don't know that Zeev or anybody else has kept a scorecard on the percentage of times in which a floorless convertible instrument has resulted in substantial stock price declines. I would like to seem him answer your question to the best of his knowledge, however. It's kind of ironic because I first came to know Zeev on the AKSEF thread, yet another company which used a floorless convertible security for financing. In Arakis's case, it took the shares to below $1. It resulted in dilution from 25 million shares to about 75 million shares. Zeev caught a lot of flack from the AKSEF thread (back in 96) for his warnings to them regarding their floorless convertible. However after these hard feelings passed, Zeev became the thread's resident source of wisdom. I have no idea how many companies have used such financing vehicles or in what percentage it has resulted in death spirals. But I can tell you that every one that I am aware of (I posted a few on the thread yesterday) there has been major damage to the stock price. I've posted several examples of instances in which floorless financing has resulted in damage to the stock price. Maybe you or somebody else can find one or two examples of companies in which such financing has not damaged the stock price? Again, I'm not aware of any, but that doesn't mean they don't exist. In fairness, however, this discussion is premature, because VLNC's financing does not become a floorless until 1/27 in the event there is no material purchase order by then. Until then, it is a fixed conversion. Maybe another pertinent question to ask Zeev is whether he is aware of any companies in which insiders purchased large amounts of shares within 6 months of a floorless financing vehicle? As many have pointed out, such purchasing would seem odd if the insiders did not expect to have a contract by 1/27. On the other hand, Lev seemed ignorant of the terms of the financing during the last CC. Maybe David didn't tell him what he was getting into? <VBG> <<It seems the naysayers(short interest, holders of put options or writers of call options) are running out of subjects to worry the shareholders. The financing fine print has been about the best they can come up with lately.>> The only way this subject will be put to bed is by VLNC announcing a material contract by 1/27. The closer we get to that deadline, the more pertinent the "fine print" of this instrument becomes. Your characterization of this financing as no more risky than your mortgage is just plain wrong, IMO. What are the odds you will lose your job and not be able to make your mortgage payment? What are the odds VLNC's stock price will plummet if they don't have a contract by 1/27? I know which of those bets I'd take.