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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: xcr600 who wrote (4715)	1/17/1999 5:01:00 PM
From: Mama Bear	Respond to of 122087

xcr, that's pretty standard language for a toxic convertible. It will not prevent a convert holder from converting more than 5%. I'm not sure about the time frame involved. I do know it's because neither side wants the SEC filing that would be required if the convert holder to file declaring himself as a 5% holder. The convert writer doesn't want it because they prefer to be as discreet as possible. The company doesn't want it because of the significant likelihood that another filing declaring the stake sold would follow. The more significant factor is the 20% rule, that the company can't dilute the shareholders by more than 20% without filing a proxy and calling for a vote. Also you should remember that it is not 5% of the current outstanding, but 5% of what will be outstanding. I believe there is nothing that prevents the convert holders from shorting a number of shares that would be over 5% of the outstanding, demanding conversion and delivering the new shares to cover the short. Voila, they never owned more than 5%. I have never seen a discount convert with a 35% discount before. 20% has been the worst. The shareholders are getting screwed royally. Barb