Here’s the facts about the offering Carl Morton’s Explanation of the 38.5 million shares borrowed.
The new offering will be used to pay down debt at a lower interest rate. When investors purchase a convertible note, they do so on the belief that the Company’s stock will increase. When the stock does increase over an extended period and at a high enough level, they convert the notes into shares of the company and when they convert the note into shares, they also have to return the shares they used to hedge their position. When they return those shares, they have to buy them on the open market, further increasing demand for our shares.
When the shares come back, the investors have to buy them in the open market, increasing demand. When they come back to us, they will come back as Treasury shares. It is our understanding that during the period the shares are lent out, they will not count against our shares outstanding for EPS purposes. When they come back because they are Treasury shares, they will also not count against our shares outstanding for EPS purposes.