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Gold/Mining/Energy : TS TELECOM (www.tstelecom.com): ASPIRING TELECO -- Ignore unavailable to you. Want to Upgrade?

To: Gordo who wrote (1589)	9/8/2000 3:12:21 PM
From: geoff-t	Respond to of 1762

Gordo: I, like you, was a bit concerned over the company's cash holding of almost $1 million worth of non-convertible RMB. But, after doing some reading on the company's financials (more specifically pages 18 and 46 of #8003's prospectus, A/R 2000 and Q1 results), I feel more at ease, in fact, I think the company is doing an excellent job in managing its foreign exchange risks. Here is what I think IMHO: 1. The company is collecting apples and paying with apples. 86% of its 1999 revenues and 97% of its 1999 purchases were in US$ thereby avoiding exposure in foreign exchange, such as getting stuck with a whole pile of non-convertiable RMB. 2. As a result, the company experienced virtually no losses in foreign exchange as evidenced by its Y2000 and Q1 financial statements. 3. The company's operation is based largely in mainland China. A large portion of its overhead is paid out in RMB. It therefore makes sense to keep a cash reserve in RMB even to the extent of $1 million Canadian equivalent considering its operating expenses for Y2000 totalled $9.1 million. On the point of who should get the cash of Can$22 million (another $4 million more now after the recent PP), IMHO, in the worst case scenario, like a break up situation, I think the parent should at least get 59% if not the whole thing by virtue of its majority ownership. On a more positive note, the bids for TOM are firming up with sizes as large as 10,000 shares even though Tommy continues its downward trend in Hongkong. Perhaps, the stronger hands are now realizing TOM is a better play and are slowing accumulating. Wishful thinking on my part??