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Gold/Mining/Energy : Harken Energy Corporation (HEC)
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To: Arktic who wrote (3102)7/5/1998 7:44:00 AM
From: Ed Ajootian  Read Replies (2) of 5504
 
Paul,

I've come to the conclusion that all this concern about HEC's floorless securities is hogwash and is just distracting us from the real issues at hand. As is evident from Zeev's responses to questions directed at him he has taken an overly simplistic approach to looking at HEC's situation --- ie, that any company that does floorless issues must per se be in rough shape and should cause concern for its investors.

He has chosen to gloss over several distinguishing facts that make HEC's securities entirely different animals than the other floorless securities Zeev has come across:

1) The fact that HEC is just stockpiling the cash from these issues in its bank account;

2) For the $35 mm Development Finance Agreements, the fact that these are not convertible until October, making any concern about those investors shorting against the box at this time to be silly;

3) For the RGC deal, the stock's gotta go up 15% off its base before they can convert.

Why did Bruce & Mikel do these deals with such weird terms? I don't know, but I think it is overly simplistic to assume that just because certain of the terms have elements that are in common with companies that are in desparate straits, HEC must be also.

Zeev is just spreading himself too thin IMO. Take a look at the list of his recent posts --- the guy's all over the place.

Now, let's pull this discussion back to the _real issues. I have kept behind a little war chest with which I plan to increase my HEC position, sometime before the Islero news is out, but wondering when I should pull the trigger.

The key question is what will happen to the stock price when they announce the spudding. One would think that it should pop up, but with today's weak oil prices I'm wondering whether that will be the case. And if it doesn't go up it almost certainly will go down, IMO --- as a result of the hype players getting out before the exploration risk comes to the fore.
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