Jake, let us go through actual conversion example.
Let us assume PPHMP is worth $25 (it is trading at a bit of a discount, but with any deal that is not a disaster it would peg to $25).
On a change in control, any of the following could happen to 100 shares of PPHMP:
. PPHM (or the acquirer) could pay the $2500 and redeem the preferred.
. If not, PPHMP holder can take $2500 in fair market value of PPHM shares. They still have the same $2500.
. BUT, if the PPS of PPHM is below $6, they share count is capped at 29/7 shares. That means they get LESS than the above option. At todays price, this would be about $1300 worth. EDIT! Math error on this one. Less than $2500 but not much less, and do have time to fix before time expires!
The clause is only in as a gimmick to cap the authorized share issuance problem. Nobody would ever convert at a loss to current market value. Why would anybody want to take $1300 worth of stock for something worth $2500? And if the PPS recovers, it is simply a "meh". $2500 cash or $2500 stock.
Pereg: There was no new purchase last night. Look at number of shares aqcuired/disposed. 0 across the board.
Was PPHMP a better buy than PPHM? That is a different issue. PPHMP never had the ability to be "astronomical". In return it had some advantages. Anybody else could have bought it.
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