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Gold/Mining/Energy : Arcon Energy (MIDL Presently) The Ultimate Sleeper
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To: Alan Markoff who wrote (1478)5/29/1998 2:42:00 PM
From: Jay Lowe  Read Replies (2) of 4142
 
More warrant rumor control for the newbies ...

The issue here is that there is a furor of interest over
these warrants due to the recent declaration of the company
to drop the exercise price 100%.

Now what the company can and cannot do with the warrant
conditions is controlled by the SEC by means of a specific
document registered with them a long time ago (the legal act
which makes the warrants a marketable security).

This SEC filing gives the company the right to REDUCE the
warrant strike price anytime it wants. It does NOT give them
the right to increase it.

The filing also allows them to redeem the warrants for a nickel
if the stock price goes about $2.50 for 10 days in a row. This
action called "redeem warrant" is controlled by the SEC and the
company must go through an extended ritual dance to achieve it,
along with plenty of required notice, which (as I understand it)
must be given specifically to the registered holders of the warrants
(not just published in the "Podunk Town Crier"). In other words,
you'd get paper mail from your broker announcing the company;s
intent to redeem and you would have plenty of time to convert
the warrant to common, which would be fine, since the common would
have to have been up around $2.50.

One thing to watch out for is that the market could run the common
up to $2.50 for 10 days, trigger the redemption process, and then
drop back down. So, one of your responsibilities is to remember
to exercise the warrant if the stock goes above $2.50. Hard, eh?

The company has made various claims, verbally and in notifications
to their transfer agent (the contractor who implements the rules).

The company has certain legal liabilities having made these claims
in press releases, and has even more legal liabilities when they
sign off on documents with the transfer agent.

So there is no bullsh*t going on, except the bullsh*t associated
with the traders playing their nickel and dime games. Best o' luck
to them and we'll be here long after they're gone.

If you are in doubt, follow the simple rule - don't buy anything
you are not completely willing to hold for 90 days or more. That
will make you relatively invulnerable to the bickering and dickering.
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