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Elan Corporation, plc Message Board

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  • acricketeer acricketeer Mar 19, 2003 11:44 AM Flag

    LYON price - 48.63

    They're better off buying back the LYONS at a discount than buying back stock (which would be put to them if they didn't come up with the cash). They also save on interest payments . Buy buying back the bonds, they don't push up the price of the stock. They minimize their obligations. Also, the LYONS may drop the longer this KG thing drags on and the closer we get to expiration (i.e. December)..
    There's no reason for the Company to buy back the stock. There is reason for management to buy stock personally, as it sends a signal to the market and enables them to profit/or lose on their turnaround scenario.
    While there are many who short the stock, it's quite difficult to short the bond and outside the purview of the classic arbitrage (short the stock and go long the bonds). Each security has a different class of investor. The bond holders are more staid and dowdy while the shorts and longs on the stock are speculators. The shorts want to keep the pressure on and forclose on the company. They already have large profits locked in, so they can afford to short more, knowing that the stock has lost institutional support.

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