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Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: AJ Berger who wrote (842)	5/12/1999 9:17:00 PM
From: PPutman	Read Replies (1) \| Respond to of 15615

Re: Arbitrage of GBLX and Fro shares/need to buy GBLX to "cover short" My understanding of arb in situations such the GBLX and FRO follows; Target (FRO) trades at a discount to the value of GBLX shares to be received at time deal closes.(due to possibility that any deal may not close) Therefore, the arbs buy FRO and sell short GBLX. As closing date nears, the discount in FRO shares begins to shrink because of the time value of money factor and less uncertainty about the deal closing. When the merger is complete the arbs receive shares in GBLX in exchange for their FRO shares. Then they have GBLX shares to cover short sale without buying "to cover short". Thus, no short squeeze.