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Technology Stocks : p-com (pcms) -- Ignore unavailable to you. Want to Upgrade?

To: Steven Bowen who wrote (881)	12/30/1998 11:01:00 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 1461

Steven, I am not sure if it is operative in this case, but the way floorless bandits make money is simpler. First they lay out $15 MM to buy the preferred (often they do not pay at once, but within 15 to 21 days of closure). Once they have a piece of paper (the preferred) they deposit this piece with their broker as a collateral. Then they short, they get paid back their $15 MM (if they short above the ceiling of conversion), and thus have no money at risk, while still collecting their 6% or so. Now, if the issue is floorless and the stock declines below the ceiling, they can increase their shorting further (against their $15 MM piece of paper), they get paid every time they short more. If the price went to 1/2 the ceiling, they can short twice as many shares. If they decide to finish the game, they do not buy back any of the shorted stock, they simple call for conversion and deliver the stock from the conversion to cover. There are many additional tactics that are used, but not knowing if this situation is exactly the floorless encountered else, where Castle Creek is a participant, I cannot advise you more. I suggest you read very carefully the conversion conditions, they are getting these one to be quite convoluted. Zeev