Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Big Dog who wrote (42315)	4/16/1999 12:51:00 AM
From: SliderOnTheBlack	Read Replies (1) of 95453

FLC/Put me in the ''double-dog-jealous'' camp - 13.875% and $9 bucks ! Wow.... why would ANYONE own the common with those terms ? Unfortunately, this is a private placement - the rich get richer once again.... Talk about ''preferred'' - damn, these are ultra preferred ! How about locking in a near in the money option - and getting 13.875% while you wait...sure you might get paid more pref stock instead of cash (more dilution folks) but talk about a ''preferred'' position to common - wow ! dilution - not a good thing by the way...but appears moderate. I'll double underline my view of FLC as ''speculative'' ... 13.875 % interest - 13 % ??? The analysts will run the model on dilution vs. FLC's upside. Without any unforseen major rig cancellations the upside potential longterm is still very, very substantial; but the dilution is moderately negative and the downside is not a pretty picture... perhaps; Webster failed to deliver all the cash on more favorable terms - evidently the prior bond deal was not all the $ they needed and this loan shark deal for the last $300 Mill is the reason for his ouster ? I hope to see analyst model revisions and their take on this - dilution will be the story - the warrants are for 10.5 Million shares and if they do not pay the 13.875% on the $300 Mill in year one with cash - it would be another 450K shares - 4.5 Mill +/- potentially over the entire 10 years ?; 193.4 Million shares issued now with a float of 145 Million. So the dilution is not massive, but yet it is not inconsequential. We will see in the morning what the Street thinks.... perhaps the $300M covers the potential of a cancelled deepwater contract and virtually guarantees their liquidity through the next 18-24 months. This liquidity guarantee may far outweigh the dilution aspects and may be viewed as good news. - hard to think that this surprised Wall Street, my initial view is that this had to be known by many and may allready be factored into the stock price. Bottomline; --- Where do I get my ''preferred'' ? Too bad it's a private placement - I'd be in the preferred in a hearbeat...also; in looking at the option activity in FLC today - a good barometer on the smart/inside money; 1376 calls written vs. just 120 puts...hmmm - perhaps the Street liked the removal of the liquidity risk better than the moderate dilution... We'll know in just 8 short hours (VBG) ...

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