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

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

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To: david james who wrote (2343)	4/6/1998 12:14:00 PM
From: Duncan	Read Replies (1) of 2841

From a recent excerpt posted by David James, regarding ECO's $5 million investment in DBCO: <<American Eco will monitor the activities of the Company with a view to maintaining or disposing of its interest in the Company's securities or possibly proposing some other form of acquisition transaction of all or parts of the Company. >> From my five years of M&A experience, ECO was extremely naive in negotiating the deal terms of the DBCO acquisition structure. When a company enters a multi-stage closing on ANY acquisition, there should ALWAYS be detailed "buy-back" provisions if the deal unravels. This is standard operating procedure! As you may recall, Stage 1 of the DBCO acquisition required ECO to purchase $5 million of DBCO stock at a stepped up price...in a private placement transaction. Had the purchase been on the open market...at open market prices, ECO wouldn't face the same exposure...but to blindly go enter this transaction at a stepped up price...without any "buy-back" provisions...is simply poor judgment. Either ECO's had no leverage when negotiating this deal...or ECO needs new legal counsel. Just my opinion. On a side note--for those of you who know me, I've been absent from this board for some time...as I sold my entire position in ECO after the company's poor conference call and 10K release. There were numerous issues that concerned me in their 10K, with the $18 million use of cash from operations being high on the list. Not to mention the infamous trust issue. So, for a host of reasons, I've decided to follow the board and the company from the periphery...until the perceived and actual risk has diminished. Hopefully the company will turn cash flow positive in the first quarter...we'll see soon enought. Duncan

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