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Gold/Mining/Energy : SPECIAL SITUATIONS

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To: Ciao who wrote ()	2/26/1999 4:32:00 PM
From: M. Merriam	Read Replies (2) of 59

Ciao, Regarding SGC, I own a small amount and increased my position after the news release. I talked to the president a couple of days ago. A distribution of cash is an option; however, he appeared to be tending towards reinvesting. He was concerned that a distribution might be taxed. Some potential pitfalls come to mind here. One is that a previous takeover offer fell through: some might be thinking that this one will also. Another is the way the deal is structured: the majority shareholder does not have a history of honouring its obligations to this company (I'm thinking of repaying the outstanding loan); who is to say that they'll honour them this time? Thirdly, there are at least two outstanding law suits against SGC, claiming significant amounts. The president seemed dismissive of these suits; however, I'm not so sure. It's a good idea for a special situation, but I'd approach it with much caution. I think I acted too quickly when I bought more a few days ago, when the news was released. Mike

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