Dew, Just wondering if you've had experience with any companies carrying the burden of a floorless convertible? I think GTCB had one years ago (late 1990's), but managed to get past it.
The reason I ask is because one of the big players in death spiral/distress financing (Cornell) is involved with a microcap I started following recently (for fun/curiosity) called Cobalis (late stage allergy med). Just wondering if you might have some insights into the general modus operandi of these vulture firms? Cobalis had a previous experience with Gryphon, another vulture firm, that is in litigation (alleging naked shorting by Gryphon).
I know some of the basics of how these deals work - the convertible debt has no floor to the conversion price (the potential for a death spiral), so there is an incentive to torpedo the stock to obtain the most shares from the conversion, potentially even taking over the company. Or the vulture firm could naked short the stock, drive down the price, convert, and close out the short with the new shares. Or they could even drive the company out of business altogether and pocket the entire short sale proceeds. I figure the particular strategy used depends on among other things whether or not the company in question is deemed to have value/assets.
Thanks for any insights Dew :o) I know I should stay away from this type stock altogether, but I'm just curious.
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