American Eco (ECGOF, ECX on Toronto exchange) Message Board

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Gold/Mining/Energy : American Eco (ECGOF, ECX on Toronto exchange)

ECX 1.800

0.0%

Dec 19 3:59 PM EST

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To: Michael Anthony who wrote (2227)	3/24/1998 12:32:00 AM
From: david james	Read Replies (1) of 2841

I can't say I like the last few weeks. We've clearly had a bad quarter in a number of ways and a few surprises. So how do we value Eco now? A while back I drew a number of parallels to Philip Services (PHV). It seems we are continuing down that road - although their problems appear much worse. 1. In 1995, PHV raised capital through the use of debentures. This held the stock down until they were converted. 2. Following conversion, the stock just about doubled over the next few months. 3. After a slow drop, in January they announced that they would be taking a $275 mill charge - this appeared at first to be a surprise to the company and appeared to be due to lost inventory - later determined to be caused by something related to trying to hedge against their inventory. The stock drops and the company now shows a loss of $1.09/share for the trailing 12 months - (followed by downgrades). 4. In the next month or so, their attempt to buy Safety Kleen for over $1.5 billion falls through despite a number of attempts and considerable negotiations (and assumed legal fees). The response of the market? The stock goes up. Following the loss of $275 mill when the stock dropped to about $8, the stock has since moved up to 10 7/16 - despite a variety of shareholder suits. I think the big question is what Eco will earn in 1998 starting with the first earnings to hopefully be announced in the next 30 days or so. Fully taxed, no subs for sale, no lawsuits income. With the way people are talking, I assume 20 cents or better will be considered to be great and 15 cents just average? I don't like the 4th quarter - it was ugly. We got hit hard by the debentures in many ways. But I would be happy to see any sort of industry comparison with rational numbers - even including a discount for Canadian financials - that values them any lower than 10 - given that no analyst has predicted that Eco will make less than 99 cents/share fully taxed. David

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