It's very possible that Ntephe knew of the dangers but had no other choice because they needed cash. Of course the hedge funds ask for a floorless conversion price because it gives them so many different paths to so much profit. They figured it out a long time ago. Some still haven't figured it out though.
I'd really like to know if ERHC got a no shorting provision in the debenture agreement. If you're going to do a floorless you MUST get that. I think they should have hired Deloitte before they did these debentures.
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