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Gold/Mining/Energy : Harken Energy Corporation (HEC) -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (3138)	7/8/1998 11:47:00 PM
From: drjoedoom	Read Replies (1) \| Respond to of 5504

"in perpetuum" "per annum" . . . How about "erratum?" Zeev, you desribe the $35 MM of development financing as follows: << . . . it is a floorless with a premium of 15% if the investor chooses the timing of conversion and a premium of 25% if Harken chooses the timing of the conversion. Note, they get 6.4% of profit if any et perpetuum. Then they get 15% per annum before conversion if they time it and 25% per annum if HEC times it.>> . . . 6.4% "et perpetuum" . . .then 15% "per annum" . . . Sorry, Zeev, but you should publish an erratum! Error #1: The 6.4% is not paid "et perpetuum" (by which I presume you mean "forever"). It is paid UNTIL conversion. The finance agreement stipulates that "the Owner [HEC] hereby grants to Investors the option to EXCHANGE [emphasis added] all or part of the investors' interest in the Net Profits Interest . . . for Common Shares. . . .>> So, the investors can have (a) a share of the profits from these three projects, or (b) a share of the company, but NOT BOTH. Error #2: The 15%/25% is not simply paid on top of the Net Profits Interest. Any profits paid are deducted from "Unexchanged Advances" and the 15%/25% is accrued on the reduced amount. So it seem that if the profits amount to 15%, offsetting the 15% interest, no net accrual takes place! [Correct me if I'm wrong here, Zeev; this legalese gets very dense.] So is it "caveat emptor" or "caveat lector?" Let the buyer beware . . . or the reader? Joe