Replies to post #24314 on Electronic Cigarettes International Group Ltd fka

[Bernie-UK]

Your point? We know it's been shorted alongside the conversion, that's obvious.

[Millstone]

I just scoured a few of the convertible notes from 2014 and the most recent one. Nowhere is shorting expressly prohibited. It is not mentioned at all, as Renee pointed out.

I did find some interesting tidbits:

The Notes agreements that I read all contained language prohibiting Noteholders from effecting conversions that would lead to a noteholder owning more than 4.99% of ECIG shares, or 9.99% without giving notice to ECIG. The Note holder would 'promise' that they don't own more than 4.99%.

So...the Maximum any noteholder could own pre A/S increase is 30,000,000 shares IF they notify the company.

Most likely they are converting and covering as fast as they can rather than holding on to the shares.

Millstone

[tbone8]

Thank you for the reply.

Yes I am sure management was quite aware that shorting could occur due to the convertible notes.

Is it possible that such covenant is in the Securities Purchase Agreement contract but not in a public filing?

Could you provide any resource that shows convertible noteholder shorting to be legal? I was under the impression that it was illegal unless contractually agreed otherwise, but could not find any resource to verify either.

I used the language in the S-1 that was withdrawn to demonstrate ECIG's awareness that shorting CAN occur.