Convertibles for a Good Year

01/12/2007 12:00 am EST


Richard Lehmann

Publisher, Forbes/Lehmann Income Securities Investor

Income expert Richard Lehmann's newsletter offers a wide range of income opportunities. Here, he profiles a biomedical company and a financial business, recommending a couple of their convertible investments which he feels offer excellent potential...

"Cryolife, Inc.; 6.00% (preferred); Par $50.00; Current price $49.05; Current Yield 6.12%; Exchange NY; Rated NR/NR; Call 04/08 at $50.00; Conversion Rate 6.2189; Conversion Premium 19.32%; Common Stock Price $6.61; Pay Cycle 1b; CUSIP 228903209; Family Optional; Symbol CRY; (need preferred designation). Cryolife (CRY) processes and distributes implantable living tissue for use in cardiovascular, vascular and orthopedic transplant surgeries.

"The company's BioGlue Surgical Adhesive is FDA-approved as an adjunct to sutures and staples in adult patients. Cryolife develops bioprosthetic cardiovascular devices including stentless porcine heart valves used in Europe.

"The company's third quarter 2006 revenues were posted at $20.02 million and net income at $1.98 million. Last year, Cryolife's third quarter revenue was $16.46 million and the company had a loss of $3.12 million. This is a small company in a very competitive market. It appears to be growing both financially and in stature throughout the world medical community. High-risk growth investors should consider this preferred. Buy at or below $51.00.

"Lazard Ltd.; 6.625%; (preferred) Par $25.00; Current Price $39.85; Current Yield 4.16% Exchange NY; Rated Ba1/NR; Mandatory conversion to Common Stock 05/15/08; Conversion Rate variable; Common Stock Price $45.42; Pay Cycle 2m; CUSIP None; Family Mandatory; Acronym Equity Security Units; Symbol (no preferred designation). This mandatory preferred consists of a purchase contract and part of a senior note. On May 15, 2008, this issue will convert to 0.8333 shares of common stock if the common is at or above $30.00. If the common is below $25.00, the conversion rate will be 1.0000. Between the two common prices, holders will receive $25.00 worth of common.

"Lazard Ltd. (LAZ) is a global financial advisory and asset management firm with operations in 29 cities across 16 countries. The company provides advice on mergers and acquisitions, restructuring and capital raising as well as asset management services to corporations, partnerships, institutions, governments, and individuals. For the third quarter 2006, Lazard reported net revenues of $297.51 million and net income of $13.16 million. For the same period 2005, the company's net revenue was $356.9 million and net income was $18.6 million. Because of the low ratings, this issue is best for high-risk investors. Buy at or below $43.00."

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