7936567 Canada Inc SWYDF

RE: Debenture

[mohasa]

What was issued was a convertible debenture, not just a debenture. From the news release, the convert price has the potential to create an unrestrained amount of dilution, this depending on the trading price of the stock at the time of conversion. <> I do not see any restriction on the number of shares that can be issued in connection with this convert! Is it buried in the fine print elsewhere? The convert has the potential to induce the following type of activity: Short the shares before the convert date - do so in a big way. Accept shares in the Series B debentures. Use the new shares to cover your short. Here, you make money on shorting, you receive interest payments, and if the avg price is lower than $1.25, you get even greater ownership of SWY! That is an inducement to get the stock price as low as possible - this can happen easily if investors are not overly satisfied with the progress the company has made in two years. A convert of this type is made by companies hard pressed to get funding on more favorable terms. Hopefully, the potential explained above will not be exploited. Perhaps there is a restriction on shorting that I am not aware of. But even without shorting, there could be significant dilution. Shorting is just an additional avenue to make more money and get greater ownership of the company. I am a shareholder (from Ashton).