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Razor :
I've probably been one of the biggest supportes of HEC over the past 4 years or so. Contrary to what Don has recently said, I know plenty of people whose cost is zero on this stock as they had taken money out when the stock traded at $5, $6, and even $7.
Rod, attests to the savy of HEC management, and I usually agree. Recent turn of events however, has got me thinking....
Maybe you, Kenny, Zeev, Rod, Art, Don, Frank or anyone can help me out here....
The recent buyout of RGC (floorless) convertibles cost HEC $10mm or 67% of the amount they originally received from RGC. RGC was in the process of extending the conversion date out one year, but they must have gotten wind of Islero being non-commercial and decided to convert their shares.
Why didn't HEC just give them the shares??? Can't remember where the stock was at the time, but say it was $1.75. If HEC gave them the 8.5mm shares, they could have saved the $10mm in premium they paid. They could have then used the original $15mm and bought back the shares on the open market at $1.5 or so.
RGC couldn't have intended on selling their 8.5mm shares because they wouldn't have made any cash on the deal and they would have to hold their stock until it proceeded north thus making it possible for them to sell at a profit.
For that matter, the $10mm in premium paid could have also been used to purchase even more shares.
What was management thinking(?) or am I off base?
Thanks Anyone.
RFB
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