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Strategies & Market Trends : Trader J's Inner Circle -- Ignore unavailable to you. Want to Upgrade?

To: NoWhereMan who wrote (2160)	12/16/1998 2:04:00 PM
From: M. Scott Gegenheimer	Respond to of 56535

NWM and Laura, I wanted to add to your comment on warrants. Normally warrants are issued with debt not because the company wants to issue them, but because the VC/bank wants an equity kicker along with the interest they earn on the debt they provided (mainly for start-up companies). Most VC/Banks want 5-7% of the debt they provide in warrants i.e., if they provide $10M in debt they want $500-700K in warrants. The warrants are long term options that are normally way out of the money and are only converted when there is an IPO or sale of the company. In the aggregate the warrants offset some of their risk for the VC/banks and allows them to receive some of the benefits that the provider of equity would get if the company does well. Warrants are also dilutive. Hopefully this helps. I tried to keep it short. If you want more info let me know. To All: how do I post a question/comment to a specific person? I normally hit the response button. Go BAMM, I missed the $22. Still holding 1K @17/share. Will probably get out today.