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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Erik Lundby who wrote (17247)	1/28/1999 10:13:00 PM
From: Roger A. Babb	Read Replies (1) \| Respond to of 18691

Erik, RACE looks floorless to me: The Series D Convertible Preferred Stock is convertible into common stock at a conversion price equal to a discount from the market price on the date of conversion. On March 16, 1999, a conversion price floor and ceiling will be established based on average market prices of the common stock during specified periods of time prior to March 16, 1999. The conversion price is capped at $3.00 per share. Based on this conversion price formula, as the market price of the common stock declines, the Series D Convertible Preferred Stock will be convertible into a proportionately greater number of shares of common stock, until the conversion price floor is reached. The number of shares we issue in payment of the premium on the preferred stock will also increase as the market price of the common stock declines. These increases in the number of shares issuable upon conversion of the Series D Convertible Preferred Stock and upon payment of the premium on the preferred stock could result in a meaningful dilution to other holders of common stock and adversely affect the market price of the common stock. In addition, the holders of the Series D Convertible Preferred Stock could convert and sell part of their shares, which could drive the stock price down even further and permit them to convert additional shares at a lower price.