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Biotech / Medical : Oxford Health Plan (OXHP) -- Ignore unavailable to you. Want to Upgrade?

To: men mailman who wrote (1165)	2/27/1998 11:06:00 PM
From: Raptor	Read Replies (2) \| Respond to of 2068

Mailman, thank you for your response. In its simplicity, it demonstrated rather fully your lack of understanding of finance, particularly as it applies to this situation. You state << Your $4 for the option is faulty reasoning. You can ask the same question as to any preferred.>> and << You fail to include an additional 350 mil in debt and 400 mil from warrants as well as current reserves.>> As to point one, you may be thinking that the TP Group received (or I should say, may receive) a convertible preferred type of security. You are incorrect. They propose to receive a straight 8% preferred stock. It will pay a dividend and be redeemed at par. In the case of a convertible preferred stock, the holder must turn in his/ her preferred to receive his/ her common. Oh by the way, they are being handed warrants separate from the preferred stock. This is why I value them separately. They are getting the whole shabang for their $350 million. Point two, it isn't clear if straight debt will be considered capital by the regulatory authorities, and even if they do raise $350 mil additional and it is considered good capital, it will be a very slender and high cost capital base, what with all the interest costs. Remember, these will all be costs that didn't exist before December 31, 1997. As to the $400 million additional capital from the warrants, they will only be converted if there is a successful turnaround and the stock rises. Of course they may be exercised a year from now after the reset at much lower prices, but I wouldn't count that chicken before it's hatched. Regarding the need for NY State to save Oxford, I guess I need to see how much Oxford has contributed to NY State political coffers. You may have a point. {:-> I do agree that the members and physicians of the Oxford network are very important to the State, but I am not 100% sure that the empathy extends to the Oxford common shareholder. My bet is simple. If the company can raise additional capital and survive the next several months in its current form, I believe the fundamental picture would remain poor enough for the stock to remain depressed long enough to reassess. If they don't receive the financing necessary, and the State feels the need to step in, it may do so to save the network and pull the plug on the shareholders. I like the risk/ reward on the short side. One other point. I expect the first quarter operating loss to approximate $1 dollar per share, as evaluated in my prior post. Have a nice weekend.