And, in addition to the point you make, Millennium can easily short against their "position" and if the stock drops they make more money beyond their 2%!
Then, if VAPH does not repay Millennium because the stock drops (it will drop if Millennium is shorting "little by little" and Millennium does not need to borrow stock in order to short), Millennium can "re-do" the deal and take out a large chunk of equity in VAPH and other "cash and prizes."
This is a classic TOXIC deal.
If VAPH is a successful company, if the Athletes Foot medication becomes the "cats meo," then the result could be completely different.
You bet they shorted this pig. Convertibles are a hedge funds best friend. Shorting the stock is the main benefit from buying a convertible. That is why many fly -by-night compnaies issue convertibles, cuz they cant get anyone to actually buy the stock. Great way to raise funds for a company in need; great no risk play for a hedge fund.
So you are suggesting that a 3.2 billion dollar fund is doing this to pick up a short position??? Oh come on man, what the hell are you smoking? Can I please have some?
Didn't you see the anti-hedging language?
How about this WILD theory: Millenium, a 3.2 billion dollar fund, did extensive due dilly and found a company that was worthy of a $7.5 million investment. They hope to make a nice return and someday sell their stock. Period. People still do that ya know - weirdo's like me i-n-v-e-s-t their money for periods longs than the lifespan of a mosquito.
Do you really think the guys at Millenium are as dumb as you make them out to be?
Congrats on shorting this pos. You withstood quite a pump so you deserve a good reward. As for millenium, MAYBE they'll get 2% interest once or twice before VAPH goes into default. It is still money down the crapper borrowing capital to this confirmed loser ceo. No mention of a credit rating for this issue but its probably C- one notch above D as in default. And I thought the bond was not to be shorted against. If they shorted this crap then it would be a safe bet by cashing in the shorted stock.