Re: [SLUG] interesting RedHat news

From: Doug Koobs (dkoobs@dkoobs.com)
Date: Fri May 13 2005 - 10:36:35 EDT


John Pugh said:
> What's even more interesting at the 2nd news item is the fact that this investment
> was done by Dell's private investment firm (w/o Dell's knowledge - which is common),
> invested back in late last year, and has lost nearly 60% of it's value in that time.
>
> JP

I'm no financial wiz, but that's not how I read it. The original investment was made
by MSD, which is Michael Dell's investment firm (MSD are Dell's initials). I don't
remember reading that is done without his knowledge, although that very well could
be the case.

Also, it was not a purchase of shares, but of debentures, with an option to exchange
for a certain amount of shares at a future time. The story stated that MSD has just
used that option to change over the debenture to shares, even though the shares are
worth 60% less than the face value of the debentures.

If I am reading this correctly (and that is a big IF) it seems that MSD believes
that the RedHat share price will rise soon. Otherwise, why would they trade $100M in
debt for $40M worth of equity?

Doug

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