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Biotech / Medical : Catalytica Energy Systems, Inc. (CESI) -- Ignore unavailable to you. Want to Upgrade?

To: WTMHouston who wrote (1490)	3/26/2000 10:07:00 PM
From: WTMHouston	Read Replies (1) \| Respond to of 1514

Well, looks like I was only half right. $10-$11 was once again a good buying opportunity -- at least for the short term. That said, there appear to be many unanswered questions. How much of the company will be offered in the IPO and at what expected price? My guess is that CTAL will see the following consequences from the spin off of some portion of CS. First, it will generate some cash for CTAL which will let CTAL pay off debt which will flow directly to the bottom line in the form of better earnings from reduced interest expense. Second, if CTAL offers enough to reduce its ownership to below 50%, the current negative earnings implications will stop affecting CTAL's income statement which should improve EPS performance. Here are my guesses. CS offers around $150 - $200 million in IPO stock. Some will be new shares -- to fund CS growth -- and some will be from CTAL and Enron. I will bet that CTAL and Enron both recover there entire initial investments in CS, which in CTAL's case will show up as a one-time extraordinary gain on the income statement. If CTAL retains less than 50% ownership in CS then the upside from a future earnings stream to CTAL is eliminated, which may ultimately, adversely affect CTAL's stock price but will certainly have a positive effect on the book value. It will be interesting to see how it is structured and what happens. Perhaps, CTAL will also spin-off some of CS to existing shareholders, which would truly give CTAL shareholders some value for CS. I wish I had bought more at $10 1/2 because it would have been a nice gain. But, hindsight is always 20-20. Troy