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Gold/Mining/Energy : American International Petroleum Corp
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To: CMon who wrote (4760)11/6/1997 8:10:00 PM
From: Juan Dominguez  Read Replies (5) of 11888
 
I'll tell you why this was an important financing and why a JV IS, and I repeat, IS around the corner.

The single most important reason why they need financing now is to be in the best possible bargaining stance with a potential JV partner.

If a potential JV partner sees that they have little or no cash and CASH STARVED, they will believe the they can have their way in the negotiations. The will figure that AIPN does not have the staying power to survive and therefore, assume that AIPN will be more inclined to sign a quick "cheapy" deal. They think they possibly can get in a deal at less than the going rate for possible reserves, because of AIPN's desparate financial position.

However, if AIPN showed that they have plenty of cash(now over $13M) in the bank, a potential JV partner will see that they are not "desparate" and will have to negotiate fairly knowing they don't have the upper hand in the negotiations. Furthermore, now that Wavetech has finished their analysis and interpretation of Soviet data and that AIPN has begun to talk to numerous potential partners the stakes are higher and the bidding will escalate.

IMHO, AIPN was probably given an inadaquate offer from a potential JV partner and decided to take steps in order to shift the bargaining power over to their side. Now that they have showed all potential Jv partners that they are financially healthy, have over $13M in the bank and have a fully operational refinery that will produce cash flow, the negotiating time and power will be on AIPN's side. I quicker agreement should consequently, come about.

Regards to all

Juan
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