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GT Advanced Technologies, Inc. Message Board

  • bot_feeder bot_feeder Feb 21, 2013 12:40 PM Flag


    One thing I should do is go back and double check the terms of the convertible. When it comes due in 2017 or whatever, did I understand correctly the company has the discretion to convert the preferred into stock at the 7.71? If GTAT had to return the cash in 2017 when the convertibles expire, I wouldn't count on them having the cash to be able to do that. If they just need to issue shares at 7.71 in 2017 to meet the terms of the convertible then that sounds good.

    One way or another, in hindsight it was a good thing they raised some cash at good terms when the stock was around 6. If they were to do such a convertible today the terms would probably be really unpleasant.

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    • "The notes will be convertible, under certain circumstances, into cash, shares of the Company’s common stock, or a combination of both, at the Company’s election, at an initial conversion rate of 129.7185 shares of the Company’s common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $7.71 per share of the Company’s common stock. The Company will not have the right to redeem the notes prior to maturity."

      That's from the news release on the convertible from last Sept. One thing I'm not sure. "initial conversion price": I guess that means it is the conversion price right now. I would assume that means if owners of preferred shares want to convert them for GTAT common at 7.71 they can do that. (don't all stampede at once, heh heh) But what would the conversion price be at maturity? Would that be the market price at that time? Or would that still be the 7.71? And if the "initial conversion price" means the price that preferred share owners can convert at as of the issue of the preferred in Sept 12 or whatever, does that 7.71 remain the conversion price until maturity?

      • 2 Replies to bot_feeder
      • Keep digging and you will find out why the corporate officers refuse to own the stock. It's complicated, but it's the reason the company can have such a low price, yet never rally. I basically understand it, but not before I was buying the stock. I'm just holding.

      • I guess one thing that appears to be the case: If an owner of preferred shares wants to convert, the company decides whether they will pay them off in shares or cash. Obviously if anyone wants to convert right now the company would pay them off in shares at 7.71.

        Basically, it sounds like it is a bad idea for preferred shareholders to convert prior to expiration.

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