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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: FMK who wrote (9259)	3/13/1999 5:51:00 PM
From: Larry Brubaker	Respond to of 27311

First of all Fred, they didn't lend money, they bought convertible preferred shares. Secondly, if you are bringing up other investments Castle Creek is involved with, you might note they also purchased convertible preferred shares in Osicom (FIBR). Osicom shares plummetted following Castle Creek's investment and they ended up doing a reverse split, and buying out Castle Creek because FIBR felt the terms were not in the best interests of their shareholders. Thirdly, your argument evades the point that these deals are structured this way because nobody is interested in buying shares at a fixed price. They structure the deal so they can't lose because of the substantial risk in the investment. VLNC obviously had little choice other than to accept this deal. They would have violated their fiduciary duty to their shareholders by risking unlimited dilution if there were other offers on the table to purchase shares at a fixed price.