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What is the real price of our shares

We have a convertible note that can be converted  by the lender into stock at any time or times during the term of the note. The conversion price is established by reference to the average lowest closing prices reported by a recognized reporting service in the ten days preceding every conversion.  We have built our share price database using Yahoo Finance, whereas our lender prefers to use Bloomberg. While I am not surprised that the reported closing prices may occasionally be slightly different, I am surprised that the Bloomberg prices are universally lower than Yahoo, and not by just a fraction of a cent.  (See data below) . In two further conversion calls, Bloomberg's pricing was again universally lower. I am beginning to think that it is not a coincidence that on 30 separate days, Bloomberg has reported a lower closing price than Yahoo, and this pricing is working to our disadvantage.  Has anyone out there experienced this differential reporting of a what I would expect to be a factual event, and does anyone have any idea why Bloomberg has been lower in 30 out of 30 occurrences to date?

 

1st conversion Per Yahoo   Per Bloomberg   Difference
Date Volume Adj Close   Closing bid Volume   Close Volume
12/14/2010 95700  $    0.540    $           0.450        10,325    $      0.09        85,375
12/13/2010 72900  $    0.600    $           0.402        72,815    $      0.20               85
12/10/2010 21900  $    0.560    $           0.400        21,810    $      0.16               90
12/9/2010 24100  $    0.580    $           0.505        24,085    $      0.08               15
12/8/2010 23900  $    0.580    $           0.480        23,865    $      0.10               35
12/7/2010 30800  $    0.520    $           0.400        30,705    $      0.12               95
12/6/2010 11300  $    0.750    $           0.610        11,250    $      0.14               50
12/3/2010 33800  $    0.650    $           0.650        33,775    $         -                 25
12/2/2010 32800  $    0.700    $           0.670        32,730    $      0.03               70
12/1/2010 89700  $    0.700    $           0.500        89,650    $      0.20               50

 

Answers

Ray Calabrese
Title: Treasurer
Company: Interim Treasurer
(Treasurer, Interim Treasurer) |

Pricing services will always have differences. I don't want to sound like a monday morning quarterback, or anything worse than that, but if the agreement wasn't specific as to the pricing source for conversion, you're stuck with the numbers they give you.

Paul Moore
Title: VP of Finance
Company: PC Helps Support, LLC
(VP of Finance, PC Helps Support, LLC) |

I agree with Ray; your lawyer really dropped the ball on this one, as naming a specific pricing source of record is standard language. I suppose you priced this deal using Yahoo info & are stuck executing it with Bloomberg info, so your lawyer really cost you this time.

Keith Taylor
Title: CFO
Company: Lyris, Inc.
(CFO, Lyris, Inc.) |

Simon,
Specifically to your question, I too am surprise and find it weird that there was a 30 for 30 lower pricing from Bloomberg. It seems that there may be some further investigation on this... I strongly suggest you research what the market maker publishes and thats what you should go with.

As to the other colleagues' "tough luck" messages, I beg to differ with the others. I do agree that its always best to explicitly name the service to peg the pricing on, but if it's undetermined, then I'd recommend you approach the lender to compromise or point out that you reject their choice of service to peg the price to. They will realize they screwed up to -- its not a "guilty 'til proven innocent" in their favor -- talk with your lawyer -- I assure you they will agree the lack of explicit leaves you both in a position of negotiation.

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