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Gold/Mining/Energy : American Eco (ECGOF, ECX on Toronto exchange) -- Ignore unavailable to you. Want to Upgrade?

To: david james who wrote (1617)	2/7/1998 11:46:00 PM
From: Chien Li	Respond to of 2841

Sanda's money did not come in as of Thursday. Therefore, DBCO is to become 100% American Eco owned if the deal goes through. If so, why would the $93 mil offer include $30 mil working capital infusion, when DBCO shareholders would be long gone and DBCO become part of ECGOF? The $30 million working capital would go into the balance sheet of ECGOF, right? I know little of acquisition and would appreciate your thoughts or clarification on this.

To: david james who wrote (1617)	2/8/1998 11:18:00 AM
From: Duncan	Respond to of 2841

<<The one major unknown to me is whether insiders (Deere Park included) own a sufficient number of shares to make this a done deal, or whether there will need to be a proper shareholder vote. Hard to believe that Eco would put up the $30 mill unless they were fairly certain that there were sufficient votes to carry this deal.>> Yes. These are the unknowns. Assuming the recent article in the financial post was reasonable accurate and ECO did indeed put up $30 million in total...it's fair to assume ECO and the DBCO board have agreed on a transaction price and both have confidence the necessary shareholder vote will be approved. Usually when a Company deposits the initial round of "good faith" monies--in this case it's $5 million, there is an amount stipulated in the good faith agreement that calls for a breakage fee if ECO chooses to walk. Probably $250K to $500K. So the initial $5 million doesn't really mean much...but if ECO put forth another sum of capital, it's usually a sign of confidence in the deal terms and likelihood of approval. As for approving such transaction, traditional Corporate Bylaws require a majority vote of the director group...and if approved...then it goes to a shareholder vote for ratification. Most Article of Incorporation require 2/3 shareholder approval from each class of stock to ratify a merger or acquisition where 50.1% of the stock or assets are merger or acquired. Seeing as we don't know which Director(s) resigned recently, it's hard to determine if the Board votes are present...but I personally don't view this as an obstacle...assuming ECO has put forth two rounds of commitment capital. The sedond round of commitent capital wouldn't have transpired if ECO didn't believe the Board votes were in their favor. However, if someone would like to figure out the Board make-up, we had 10 Directors on January 16...and two supposedly resigned last week...and I thought one stepped down about 10 days ago...leaving 7. Therefore 4 votes would be need to send the acquisition deal to a shareholder vote. Please correct me if I'm wrong. It's also fair to assume Marenge (CEO) and Matossian (Pres) remain on the Board...because this would have been a press release with names if an officer/director resigned....so, if the following two still remain--1) Derek Tennant--Deere Park consultant appointed to DBCO board on 10/9/97...and 2) Allen Gerrard--Doug Gerrard's father at Deere Park, who was appointed to DBCO's board on 11/13/97...we have majority approval of the Board. Now for the 2/3 shareholder approval. According to the most recent 10K, which precedes all proposed Sanda announcements, the control group consists of the following parties: Michel Marenge--CEO--22.9% Nicolas Matossian--Pres--22.9% Deere Park Capital--22.9% -------------------------------------------------- Total 68.7% Seeing as Deere Park's 22.9% has shared voting power with Marenge...it's probably fair to assume Marenge's interests are alligned with Deere Park's interests...and we all know Deere Park wants this transaction to go through with ECO. Therefore, if we get the necessary Board Approval to move forward with the transaction, it's fair to assume that Marenge and Matossian approved the Director vote and that Marenge, Matossian and Deere Park will account for all the shareholder votes required to approve this deal. As for Sanda's potential ownership, it's material to all shareholders and would have been announced if completed. From my vantage point, there is no Sanda as this time. Duncan