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Gold/Mining/Energy : Harken Energy Corporation (HEC)
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To: Darryl who wrote (2980)5/28/1998 11:19:00 AM
From: Arktic  Read Replies (1) of 5504
 
I would need to review the precise terms of the convertibles. To the extent that HEC hits the mother lode in the Cambulos and the stock heads for the stars, then the European investors could buy insurance, so to speak, by selling the stock short and having the convertible note to protect their short position. However, if the company is really moving up, this pressure may not do anything to the stock value.

As a long term investor, I don't mind using this strategy to raise monies as long as the internal rate of return for the money acquired is substantially higher than the dilution factor. I have learned over the years that is worse to be undercapitalized when trying to develop a valuable resource than to experience some dilution in order to acquire necessary capital to proceed. In the short run, investors don't like dilution but if HEC wants to develop the pipelines, surface production facilities etc., then they will need a big chunk of change.
Obviously, this is their strategy.

Paul L. Craig
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