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To: Ed Ajootian who wrote (82590)	12/24/2000 1:43:45 PM
From: jim_p	Read Replies (1) \| Respond to of 95453

ED, By Texas corporate law since PEX will be acquiring SMOP in a tax free reorganization, the warrants must either be tendered for at a price that the warrant holders are willing to sell for or the warrants will become warrants on the new PEX after adjustments based on the exchange ratio pursuant to the warrant agreement. Since the warrants are perpetual, and they have $.50 of real value, I doubt if anyone in their right mind would submit their warrants to a .50 tender. My guess is the warrants will trade up 100% or more on Tuesday. If not I will be buying. SMOP was taken over by the bondholders, who now own 90% of the company. Their basis in the SMOP stock is less than a $1.00. The control group of bond holders are the ones who want the tax free exchange, not PEX. They are the ones who will be taking stock and not cash. When the bonds were trading at .30 cents on the dollar, I tried to put together a group to buy out all the bonds and do the same thing. Actually it was my idea, and it just so happens the current owners of SMOP are very good clients of the investment banking firm I approach to do the financing. Such is life. SMOP and PEX are about equal in size, if PEX's stock price drops below an average of $6.75 during the pricing period, then PEX would have an option to drop out since they are not obligate to issue more than 4MM shares, and can only pay up to 50% in cash. I'm not worried about this since PEX is just pocket change for Kaiser who owns 49.99% of PEX. PS: The big buyer and then later seller of the bonds was George Seros at Guardian Life Insurance Company of Amercia. Merry Christmas, Jim