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Gold/Mining/Energy : Mongolia Gold Resources
MGR 21.28-0.2%Dec 3 3:56 PM EST
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To: Phil Jones who wrote (1816)2/5/1998 8:50:00 AM
From: Dave R. Webb  Read Replies (1) of 4066
 
The shareholders involved in the above transaction purchased their shares at a substantially higher price, AND have had that stock restricted from trading for 12 months. They have been beaten-up pretty badly in the market, as they could not have sold a single share from this placement. Their placement provided a substantial quantity of necessary funds in very short order.

Repricing warrants provides for two benefits, and that is the only reason that they're considered.

1. All shareholders have to benefit. Clearly the warrant holder (which must be arms-length to the company) benefits in the repricing. A warrant with an exercise price twice market with certain "use it or loose it" provisions added benefits all shareholders.

2. The funds added on exercise would certainly benefit existing shareholders, but only at values in excess of $.40 per share. Unfortunately, any shareholders (or anyone in the public) can obtain shares at less than this price today.

The BCSC regulation have long provided benefits to better funded individuals, in the name of protecting the shareholder. I think that these are reasonable protections, if not difficult to justify sometimes. It is difficult to make a rights offering, or any other broader financing available to existing shareholders. The time and the expense are enormous.

Dave
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