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Strategies & Market Trends : Arbitrage Plays -- Ignore unavailable to you. Want to Upgrade?

To: Allen Furlan who wrote (264)	10/23/2000 5:18:41 PM
From: Mark Ivan	Read Replies (1) \| Respond to of 376

Allen, You are correct of course. If the deal is a no-go, you can lose BIG. And since the play seems so good still, one would assume that the risk is high. I actually know nothing of the deal. I was merely pointing out to David that to "plug my life savings into TGP" as he put it, may still be a bad idea, even if the deal goes thru. In these types of play, one must hedge by shorting the other side so that you are truly playing the arbitrage and are immune to market swings. Mark

To: Allen Furlan who wrote (264)	10/24/2000 4:09:32 PM
From: David Lee Smith	Respond to of 376

I did some research into this idea. There was a bill to prohibit tax-free exchanges or mergers between REITs and non-REITs that died and it's not likely to resurface as an issue. On the other hand, PCL actually got a favorable letter ruling from the IRS to change from a MLP to a REIT to enable a tax-free merger into TGP. The merger is contingent upon a favorable letter ruling from the IRS on the tax-free status of the merger. This deal has been in the hopper since early 1999, and it has some very high powered attorneys and financial advisors (including Goldman Sachs) that have looked at the deal and its tax consequences. A negative letter ruling would be making new law, something the IRS is loath to do. I expect a favorable letter ruling from the IRS and a deal that gets done.