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Gold/Mining/Energy : Medinah Mining Inc. (MDHM) -- Ignore unavailable to you. Want to Upgrade?

To: Coz who wrote (16417)	7/3/1999 4:12:00 PM
From: Coz	Read Replies (1) \| Respond to of 25548

ALL: I asked a friend of mine who has a very large stake in MDHM if he could write something up that would help explain what is taking place regarding the share dividend so that some of the confusion might be cleared up. The following is what he sent me to post on the thread. -Coz =============================================== DIVIDEND UPDATE The following 5 steps outline the process of distributing the Medinah Gold shares and exposing the short position. 1. Phase 1 of dividend distribution is over. It involved distributing dividends to the registered shareholders, the preferred shareholders, and to those who own shares in retirement vehicles and safekeeping account. 2. A large dividend certificate has been sent to the DTC (approximately 5.2 million Medinah Gold shares) to cover those who own the shares in "street name." Thus all the dividends are out and about in the system--THERE ARE NO MORE DIVIDEND SHARES. 3. It is now the job of the DTC to confer with the broker/dealers to determine how to divide up the big cert. Next the DTC will send the 5.2 million certificate back to the transfer agent with instructions as to how to apportion the 5.2 million shares. The transfer agent will then issue certificates for the individual shareholders according to the DTC's instructions. 4. Things will go smoothly for all firms that have no short position. But if a firm is short, they will stick out like a sore thumb. 5. The firms that are short will have to decide whether to distribute the dividend pro-rata, i.e. all shareholders receive one fourth of their allotment, or perhaps they will give some shareholders all of their portion and to others none. If the latter, the firm would have less angry shareholders raising a ruckus. This is the point in time that the shareholders should raise the roof too. Remember the 12 month hold on Rule 144 stock cannot commence until the name of the shareholder is physically entered on the certificate and the certificate is dated. The shorts and the DTC will stall as long as they can to avoid this step #5, because it is here that the shorts are unmasked and even more importantly, are quantified. All one has to do is multiply the quantified short position on Medinah Gold and you'll get the short position of Medinah Mining on May 7th. To this, you'd have to add any shares shorted since May 7th, the dividend record date. If this just happens to be a large number, say 40 to 60 million shares, then the wall street sharks will smell blood and begin a "feeding frenzy." As for the shareholders who did not get the proper amount of dividend shares, these matters are usually settled off to the side by negotiations between the brokerage firm of the shorts and a representative of management or of the shareholders. Sometimes arbitration is involved. Historically, the shorts or their brokerage firm ends up paying through the nose, especially if they have held up the liquidity of Rule 144 shares-What if the Medinah Gold IPO came out screaming for two months and then suddenly backed off and the poor shareholder in question had no liquidity for those two months? Ouch! This is a definite possibility since the Medinah Gold shareholders will all know when these "kidnapped" shares will become free trading. The negotiated price has to cover the loss of liquidity and other damages caused as a result of the shorting activity in addition to the inherent value of the assets of Medinah Gold. Other damages incurred may include over-dilution, loss of financial opportunities, etc. The scenario outlined is actually a little more complicated in that there exists a different beast. the Central Depositary of Canada, which is a mini-DTC. In fact, they have an account at the DTC. This entity is nicknamed "the lending post" because they actually lend or rent shares to the shorts. This is why most of the shoring comes through Canada. The U.S. expressly forbids shorting of a non-marginable security (shares priced under $5). In the overall scheme of things we are now at step #5. Be vigilant.