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Gold/Mining/Energy : HARMAC PACIFIC (TSE: HRC) -- Ignore unavailable to you. Want to Upgrade?

To: Adrian Thompson who wrote (3)	2/3/1998 4:08:00 PM
From: Jay Arkay	Read Replies (1) \| Respond to of 11

Adrian, You earlier noted that you held Harmac's convertible debentures. Do you have any explanation for why they are now trading just below par (around $99) rather than at a small premium to par? They pay 8 percent annual interest, which is a couple of percent above the market rate for two year fixed income. In August 1999 (as I recall) Harmac can redeem them at par plus accrued interest. I expect that they will redeem them at that time unless short-term interest rates skyrocket in the interim. It is true that they can do the redemption in shares (I recall that it is at the previous 20 or 30 days average share price), which might be a slight damper on the appeal of the debentures, but can this explain what I would otherwise calculate as a $3 or $4 price discrepancy at the current market value? (Note that in this analysis I am regarding the conversion value as essentially worthless, given how far the current share price is from the conversion price. If one assigned some value to the conversion option, then the discrepancy is that much greater.) Your views would be appreciated. Jay