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Technology Stocks : Blank Check IPOs (SPACS)

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From: jrhana	11/7/2007 7:00:48 AM
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I think Marshall Reynolds is on the verge of announcing a deal that will rank ESA with the more successful SPACs to date. If I am correct the ESA warrants will fairly soon be trading at a multiple of their current price. It has been pointed out here The SPAC investment is like watching paint dry. But it is really even more frustrating than that IMO. I would say it is like watching paint dry in a darkened room. As I have a very over sized position in ESA warrants, I have been drying to watch that paint dry with the light let in through a crack in the door. In other words, I have been trying to surmise what Marshall Reynolds is up to. Everything that follows is admittedly prejudiced by my large long warrant position. Much of it is based on inference. The key with any SPAC speculation is the management. So with ESA it is crucial to look at Marshall Reynolds. richmondfed.org First what has always been Marshall Reynolds' modus operandi in the past? Well what he has always done in the past is put together several almost mom and pop type operations into a single cohesive unit. He decidedly is not a slash and burn corporate raider type buying up old companies on the cheap and then selling off the parts while throwing a lot of long term employees out of work. Rather he is a builder-he likes to create jobs and form rational, profitable and functioning businesses that actually perform a service for their customers while making a decent profit while providing employment. What is the background for ESA? It is that of ever increasing energy costs. Message 24009495 Message 24014802 Message 24028822 So what does this have to do with Marshall Reynolds? Well Marshall Reynolds first and foremost is a man of West Virginia. And West Virginia just happens to have a lot of energy locked up in the ground. <West Virginia Quick Facts: West Virginia is the largest coal producer east of the Mississippi River. The State accounts for nearly one-third of U.S. production east of the Mississippi River and more than 10 percent of U.S. total coal production. West Virginia’s recoverable coal reserves at producing mines are the second most in the Nation after Wyoming. Coal-fired plants generate more than 98 percent of West Virginia’s power, the highest percentage in the Nation. West Virginia leads the Nation in interstate sales of electricity.> tonto.eia.doe.gov The problem is I believe that there is a lack of large well run companies capable of efficiently extracting West Virginia's energy resources and efficiently delivering that energy to where it is most needed-ie to the utility companies of the northeastern United States. Much of West Virgina's energy resources today are managed by numerous small and poorly coordinated almost mom and pop type outfits. I believe that Marshall Reynolds goal is to create a vertically integrated energy company that will not only extract the energy from the ground but also supply that energy directly to what would be its most important customers: utility companies in New Jersey and New York. He would do this by uniting a select group of these small, poorly coordinated outfits into one large well organized, efficient, and very profitable entity. Eventually this company itself would probably be sold. I think this new company will be Marshall Reynolds' magnum opus. I believe that it will be a huge win-win situation for all involved. He will create jobs for his native West Virginia. He will enrich his shareholders-including many long time loyal associates of his. The owners of the small companies will do very well with their shares in the new company. And the utility companies of New York and New Jersey will benefit by having a new and reliable domestic supply of energy. Why has all this taken so long? It has not been (as it may have been for some SPAC ventures) a case of sitting on the money or an inability to find a fruitful target. IMO the time has been well used into putting together a vary ambitious and complex project. The major delay has been working with the SEC on a series of complex audits. I do not believe there are any significant roadblocks of any kind and that it is a matter of when and not if. But all of the above is based on supposition, intuition, history and surmise. ESA may turn out to be something else. It may not be successful. But if my basic image turns out to be correct then those ESA warrants will turn out to be a very rewarding gamble. As I have said, with SPAC warrants, if you wait until you know exactly what you are getting, you may have to pay up for that privilege. IMO the formation of a new and profitable vertically integrated energy company based in West Virginia and supplying energy to New Jersey and New York would be very well received in the stock market.

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