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Gold/Mining/Energy : T.ITE: iTech Capital (TSE) -- Ignore unavailable to you. Want to Upgrade?

To: Ritch D who wrote (584)	6/22/1999 9:36:00 AM
From: keith massey	Respond to of 5053

I think everyone has missed the huge significance of this private placement. In my opinion this investment was a brilliant first move on the part of JDX. I am in for more shares at open. In the past 2 weeks medsite.com has hired some big guns, Steven Novick and John Eastman, to start an aggressive expansion. Medsite.com is already one of the leading health web sites (100,000 registered users, 200,000 hits a month and hits growing very rapidly). Medsite.com is going to use the money from this private placement to cover the costs of the initial IPO occurring this fall and also start this aggressive expansion. Unlike Canada, it cost a substantial amount of money to do an IPO in the U.S. Getting in on a private placement with exchangeable notes just before a NASDAQ IPO is next to impossible. I think JDX was trying to point this out by mentioning in their news release: Jordex is particularly pleased to be joining a prestigious group of institutions in this private placement You just need to look at the names involved with private placements just before a NASDAQ IPO in solid Internet companies to understand how great of an investment it is. It looks like Mr. Staubt has some serious connection on the NASDAQ. So a little background- First off, what is an 8 per cent subordinated exchangeable note. A note is just a loan. The 8% interest payments are not why JDX got into this deal. On June 30 next year the $1 million U.S is converted into shares of medsite.com at a given fixed price set during the initial signing. The reason I was holding off posting last night is that I wanted to find out the conversion price of the note. I just got off the phone with Jim Graham from JDX. As part of the agreement with Medsite.com, JDX is not allowed to release the conversion price since Medsite.com want to perform one more private placement before the IPO this fall. However when pressed he did say it would be substantially below the initial IPO price. Based on similar private placement I have seen I am going to guess that the conversion is at around $1-2 a share. This means that JDX $1 million (U.S) private placement will be converted into shares of medsite.com at a price of $1-2/share on June 30, 2000 even if medsite.com is selling at $50-100. Question: Why doesn't medsite.com just issue shares with a hold period for the private placement instead of issuing subordinated exchangeable notes that they have to pay interest on? Answer: When private placements are in the form of subordinated exchangeable notes instead of issued shares the stock has the illusion of having few shares out when the IPO comes around. If they just issued JDX 1 million shares it would start to scare off the retail investor who like to only a small number of shares out (4-12 million) on these new internet companies. So why could this be such a good investment? I will use HLTH as an example. HLTH – HEALTHEON is a medical website offering some similar services as medsite.com. HLTH's initial IPO to place during Feb 1999 and was set at $8. The stock opened at $21 and hit a high of $126 in May 1999. It is presently at $90. Imagine if you took down a private placement pre-IPO that was going to be converted at $1-2/share. The IPO for medsite.com is set for this fall (August - September). JDX's shares are converted on June 30, 9 months later. In less than a year from this time this little $1 million (U.S) investment has the potential to be worth $10-100 plus million dollars if medsites.com IPO goes good and the stock runs similar to HLTH. Even if the IPO doesn't fly JDX is still in far lower than the initial IPO price. It is almost like a guaranteed $5-7 million return with blue sky potential. Either way JDX wins. Best Regards KEITH