| Part of the environmental problem of using coal to generate electricity is that, apart from whatever may be created when it is combusted, mining it is a real mess. The emissions from burning it can be recaptured and the fact that in the US, we have a couple hundred years of coal supply makes it preferable to using OPEC or domestic oil to generate electricity if the environmental aspects can be handled. Part of the mining mess created are particles of coal that are physically too small to be safely transported to electric plants. Coal dust when airborne can create a very dangerous situation. HDWR has technology that takes the particles of coal that are too small to be transported and agglomorates them into pieces that can be safely transported to a coal burning electric utility. At a coal burning utility, coal is pulverized prior to combustion, but you don't want to transport coal dust from mine to utility. A couple years ago, HDWR had clearly inept management, and they borrowed a few zillion dollars to build little plants that would convert coal dust (in the industry called coal fines) into larger particles. Unfortunately, they borrowed too much. New mgt came in and prevented the whole company from going to creditors. They sold the plants they built to electric utilities for cash plus revenue from the materials that the plants use to agglomorate the coal dust. In addition, in many cases, HDWR will get a per ton fee for the stuff that each plant produces. The federal government has deemed the product that the HDWR plants produces an "alternative fuel", and as such, the utilities get a tax break for using the stuff. Plus, it does clean up part of the nasty byproduct of mining coal. The tax break goes till 2007. Several sellside analysts have met with the company and the biggest negative they seem to come up with is that the tax credit runs out in 2007. What they have ignored in that analysis is the rate that cash is flowing into the company and what the balance sheet will look like in a year or two. Unfortunately, because of the big cash flows, HDWR does not need the services of an investment banker to raise money for them, so it is unlikely that any of the firms that have coal analysts like Bear Stearns or Merrill will ever recommend the stock. But, as most people know, stock recommendations on the part of major firms are usually paid advertisements anyway, so the lack of an endorsement from the sellside is irrelevant to me. |
