Replies to post #111043 on Wave Systems Corp. (fka WAVXQ)

[cosmoworld7]

How will that result in a lower buyout premium? Yes the share price can drop due to dillution, however the # of shares would be increased, so the underlying Market Cap would remain the same (in a static scenario) thereby making the cost of a buy out constant; if they are required to buy a majority of shares.

[wavxmaster]

Stockwatcher

Are you sure? Read page 3

" There is very little to prevent that from happening other than wishful thinking. Management no longer has sufficient control to preclude such a move and as the dilution continues the "Waviod" control diminishes as well. Additionally, the lower the sp goes through dilutive financing, the lower will be the buyout premium."

http://64.233.179.104/search?q=cache:1P47JuJ8Q6EJ:www.wavesys.com/about/reports/2002_Final_Proxy.PDF...


Wavxmaster

[go-kitesurf]

regarding a buyout possibility, wouldn't the person or organization that is accumulating shares for a buyout have to report owning more than 5% of the company at some point?

[rachelelise]

StocWatcher

A buyout can occur from two directions. First is simply an unfriendly offer directly to shareholders where Wave would have little ability to fight. It would depend on the offer and what shareholder's perceive as the alternative. It's very difficult to tell if any company is interested and if they were would they do it in this uncertain period (where it would be cheaper and easier to convince shareholders) or wait for greater certainty but maybe more resistance from shareholders.

The other would be because Wave could not secure reasonable financing (in the eyes of management) and thus they structure the deal and explain to us why it's our best choice.

I remember way back when Crazylarry raised the possibility when we were running out of funds and it seemed quite possible after thinking about it. We should have no doubt that management will do what is best for them when push comes to shove. However I also think management wants to succeed on their own because of pride (ego) and the huge amount of sweat equity invested in this thing. Although people do complain about their compensation, it is absurd to think they haven't taken huge emotional hits. Thus the second possibility is really one of last resort when practically all other channels have failed. I think it is unlikely to happen unless there are severe delays in the trusted computing rollout or some very unexpected competition emerges.