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Gold/Mining/Energy : mxp (mesa Inc)

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To: Noel who wrote (203)	3/13/1997 7:03:00 PM
From: Frederick Smart	of 394

My initial feeling would be to simply buy more preferred and play the conversion. On second thought, since I am long both the common and the preferred I stand to benefit on one side shorter term and the other longer term. These deals take some time to develop, but the way the common and preferred have been trading, I'd say the smart money already knows. There is also some speculation that Rainwater will push for a reverse stock split, something they were shooting for initially, but it got voted down. With the stock price up and a possible premuim conversion offer in the offing, perhaps shareholders will go for it this time. What I'm unclear about is how this could affect Rainwater's interest going forward. Is the Series B issue involved? I'm not sure. This is where his voting power resides. He'd be hard pressed to push for a Series A conversion while his issue remains untouched. Then again, if he uses this opportunity to buyout Series B holders outright, his % ownership could increase by an amount tthat would ensure control. That's about all I have to add at this point. Take care.

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