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Gold/Mining/Energy : Inflazyme Pharmaceuticals (T.IZP)
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To: stock talk who wrote (31)8/21/1996 11:47:00 PM
From: Sean Janzen   of 1501
 
Frank,

I called Inflazyme today to get clarification on the rights offer. It seems that a 1933 securities law has complicated the offer. Only residents of Canadian provinces west of Ontario are eligible for Inflazyme's rights offer. The company will offer all other shareholders, of record date August 8/96, a Cdn$0.08/share dividend.

Ineligible shareholders, those outside the Western provinces, might want to determine a price they are willing to buy shares on the open market whereby they receive the same number of shares at the same price as the eligible shareholders.

Example:
Those eligible for the rights offer (Western Canadians) - For every 12 shares held on August 8/96.

(2 shares x Cdn$1.20) + (1 share X Cdn$1.40) = 3 shares for Cdn$3.80

Shareholders ineligible for the rights offer - For every 12 shares you owned on August 8 /96 you will receive a dividend of 12 X Cdn$0.08 or $0.96.

What is the maximum price ineligible shareholders should pay to receive the same benefit as eligible shareholders?

1) eligible shareholders pay Cdn$3.80 for 3 shares
2) ineligible shareholders pay 3y-Cdn$0.96(dividend) for 3 shares
3) y = price per share

So 3y - Cdn$0.96 = Cdn$3.80.
3y = Cdn$3.80 + Cdn$0.96 = Cdn$4.76
Y = Cdn$4.76 / 3 = Cdn$1.59

The original rights offer allowed shareholders to acquire 3 shares for every 12 shares the owned on August 8 / 96, i.e. 1/4. If as an ineligible shareholder you buy 1/4 of your August 8 /96 position at a price of Cdn$1.59 or less then you will have received a deal approximately equivalent to the original rights offering. Today, August 21, IZP traded as low as Cdn$1.55.

I suggest shareholders contact Inflazyme at 1-800-315-3660 for clarification on the dividend. Best of luck.

p.s. My wife gave birth to a baby girl last night at 11:10 pm. Our first child. The LAMAZE classes enhanced my enjoyment of the birthing process. I recommend LAMAZE.
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