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

To: Harry_Behemoth who wrote (1788)	2/27/1998 12:34:00 AM
From: david james	Read Replies (1) \| Respond to of 2841

Yes. I believe you are quite right. DBCO will have NOLs that Eco should be able to use against their tax rate. The deal won't be complete in time for 1st quarter 98, but if they can complete everything in the next 90 days, then the rest of the year they should be able to take advantage of them. David Friday, February 27, 1998 American Eco near deal on Dominion By ROBERT GIBBENS The Financial Post ÿMONTREAL - American Eco Corp. said yesterday it hopes to sign a definitive agreement to buy Dominion Bridge Corp. by April 6. A detailed offer would then be mailed to Dominion shareholders and their approval sought in mid-May. Closing would follow a few days after that. ÿNet value of American Eco's offer will be $92.5 million, said vice-chairman J.C. Pennie in Toronto. But American Eco also assumes $37.5 million of Dominion bank debt. Dominion shareholders would get US$3 a share in American Eco three-year 7.5% notes. Every six months they could convert into American Eco common shares at US$15 a share. If American Eco shares trade at more than $16 for 20 consecutive days, the notes would be redeemed at US$3 a share cash. ÿBoth firms are engineering and construction groups and American Eco would keep Dominion's 63%-owned Australian unit, McConnell Dowell Corp. Ltd. American Eco president Michael McGinnis has joined Dominion's board and executive committee. Senior management changes should be in place by March 23, along with a $25-million loan to Dominion arranged by American Eco. ÿDominion shares (DBCO/NASDAQ) gained 7/64 to US$23/64 yesterday and American Eco (ECx/tse) dipped 20› to US$16.35. ÿ canoe5.canoe.ca

To: Harry_Behemoth who wrote (1788)	2/28/1998 12:00:00 PM
From: david james	Read Replies (2) \| Respond to of 2841

As was mentioned before, because of the losses that DBCO has incurred over the last few years, Eco should inherit a fair amount of NOLs in the acquisition. I think it is worth considering what this will do to Eco's earnings in 98, even if DBCO only breaks even. The current estimates for Eco in 1998 are around $1.40 fully taxed. I've been told that those estimates are based on the assumption of a 35% tax rate. So before taxes, Eco is expected to make approximately $2.10. I do not know if the inherited NOLs will be enough to offset all of Eco's taxes, but if they were enough to offset even half of the taxes, then we should expect Eco's estimates in 98 to rise to the area of $1.75 after the acquisition even if DBCO just breaks even. If DBCO becomes profitable or if the NOLs are of a higher amount, then those estimates should rise. With earnings of $1.75, Eco would be trading at 98 P/E of 6.4. With earnings of $2.10, Eco would be trading at a 98 P/E of 5.3. David