Replies to post #310599 on Zeev's Turnips Patch-No Politics (ZEEV)

[Zeev Hed]

My guess is that a lot of this deb was hedged as short against the box, that may reduce the short interest from around 25 MM shares to maybe only 15 MM shares in the next few month. The impact on earnings (reduction in interest of about $6.5 MM annually is minimal, and the increase in shares outstanding is under 10%. It will reduce the earning on equity by a little. The notes were due anyhow in 2006, so I am not sure why they are doing it now. If I was their CFO, I guess I would do this so I can exploit a market opportunity to replace this with a larger ($250 MM) issue which may be better priced early next year.

[peace_2_all]

Zeev,

This is what I see about sndk:

"Before 5 p.m. Eastern Standard Time on November 17, 2004, holders may convert their Notes into shares of SanDisk common stock at a price of approximately $9.22 per share, or approximately 108.5 shares of SanDisk common stock per $1,000 principal amount of Notes. Cash will be paid in lieu of fractional shares...."

Why would anyone take cash when they can have shares at 9.22 and turn around and sell for much higher or is there restriction as to when they can sell the converted shares, which, of course does not mean anything as they can short the stock knowing they will replace their shorts with their converted shares. How is this different from CD with a fixed base price? As usual, I appreciate your kind response.

I bought 500 shares on Friday and I don't want to hold if sndk is to be hit because of this conversion.