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Non-Tech : Cityscape Financial (CTYS) -- Ignore unavailable to you. Want to Upgrade?

To: Wayne Umfleet who wrote (1533)	11/5/1997 8:46:00 PM
From: Zeev Hed	Read Replies (3) \| Respond to of 2544

Wayne, the scenario you paint with B&S coming to rescue and offering the funds required to buy out the preferred was presented here whe the stock was at six, with exactly the same strength of rationality. The fact of the matter is, I have never seen B&S coming to the rescue before with their own money. On the street they have a motto, do not throw good money after bad money, they already have, I believe $300 MM tied up here. Why would people at B&S assume that astock selling at under 2 will go to 6 idf the convertible were bought out? second, now we will have to add to CTYS debt side of the assets some $110 MM (their are two issues of preferred each at $50 MM you need to buy both). What will happen to the debt rating with such a major increase in debt. Was the downgrading of debt due to the stock decline or the change in Moody ans S&P 's perception of CTYS ability to service these debts. Finally, it is CTYS that says they have sufficient cash to run till the end of the first quarter of 1998. All this said, a stock at 1-5/8 is more interesting to look at then when it was at 7. I am not buying yet, and do not even think about a B&S rescue of that kind. I think we will have to accept dilution to about 90 MM shares as a fact and see if under these assumptions, once CTYS straighten what need be straighten can they earn enough money to clear something like about $25 MM per year in the foreseeabloe future (two three years down the road). We also need to facto the fact that during such a period, we might have an economic slowdown which might hurt some of the less credit worthy borrower and evaluate what impact on non performing loans that will have. If all these analysises come rose, then it might be time to look back at CTYS. After all, even at 100 MM shares, the capitalization is only $150 MM for which you get control of a mortgage portofolio of about $2 Billion. Zeev