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Technology Stocks : ADI: The SHARCs are circling! -- Ignore unavailable to you. Want to Upgrade?

To: Dave Chanoux who wrote (1233)	2/20/1999 11:59:00 AM
From: Zhongxin Wu	Respond to of 2882

It is always in the best interest of the company to force an early convert if it is in the money. Because the convert holders will convert them into shares anyway on maturity, the company can avoid paying interest on the convert by forcing the conversion (usually dvd rate is lower than the coupon on converts). Normally, the company waits until the share price is sufficiently above the conversion price to convert. Otherwise, if the share price drops below the conversion price after the forced conversion, the convert holders will opt for the principle instead of the shares and company may face a liquidity crunch. I hope this is helpful. Jason