American International Petroleum Corp Message Board

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Gold/Mining/Energy : American International Petroleum Corp

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To: MulhollandDrive who wrote (1232)	8/11/1997 4:29:00 PM
From: faris bouhafa	of 11888

<<My opinion is that it appears that MED won't get paid unless the stock hits $5, the warrants $2. >> The acquisition of a 70% interest in MSUP was a cash/stock deal. If you read the press release carefully you will notice that there was a $400,000 cash component to the deal which AIPN paid in full as of July 28, 1997. <<AIPN has no cash to speak of, they're using stock as the currency for the acquisition of the 70% interest>> Not true. AIPN sold its South American operations to Canadian-based Mercantile International Petroleum for about $20 million which, according to the February 26 announcement of the sale, included 42% cash and assumption of debt as well as 4.4 million shares of MIP (valued at $2/share in the transaction but now worth $1.50 approximately) and $3 million in preferred shares exchangeable into common at the Company's option one year after closing into 1 million common shares of MIP. MIP trades on the Toronto exchange and its stock is US$ denominated. The cash/debt portion was worth around $8 million. I believe that the company assumed debt in the neighborhood of $3 million leaving the cash portion at about $5 million part of whch AIPN used to finance the re-tooling of the Lousiana asphalt refinery ( $2 million). More to the point is the fact that the MIP shares have a market value of $6.6 million using $1.50 as the market price. This is called a cash equivalent meaning it is convertible into cash through the sale of the secirities or can be borrowed against. Furthermore, assuming MIP stock stays at $1.50, AIPN will own an additional 1 million shares with a market value of $1.5 million. My calculations give AIPN slightly under $10 million in cash and cash equivalents.So, while we are certainly not talking about General Motors here, it is incorrect to assert that AIPN has "no cash to speak of". Chers...Faris

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