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Biotech / Medical : PHP Healthcare -- Ignore unavailable to you. Want to Upgrade?

To: DENNIS DOCKERY who wrote (63)	7/27/1998 5:31:00 PM
From: Jim Mac	Respond to of 136

I think only 3M common will be added by remaining preferred conversions, and PHP may already have removed 3M common from market by now, thanks to these low prices. Therefore, no dilution. Looks like future quarterly operating cash flow of $10M more or less, even with paying down that HIP medical claims payable over 4 quarters. Increasing claims payable in January quarter was a good move, since it allowed PHP to put more cash to work streamlining HIP clinics and lowering medical expense ratios during first 90 days of operation, which will increase future cash flow. Investing and financing cash flows should be minor, giving overall good cash flow. Any buyback debt repayment should be no problem with all the cash flow being generated, or can be largely covered by a million common issue later on (assuming higher PPH). In either event, it may be able to get renegotiated. I see no problems.

To: DENNIS DOCKERY who wrote (63)	7/27/1998 5:41:00 PM
From: Jim Mac	Respond to of 136

Why no dilution? Because remaining preferred can convert only 20% per month while highest daily low of PPH is at or below $25 during converson month: that's in the SEC documents. As PPH rises, preferred convert into fewer and fewer shares. At this time, at least 1/2 of preferred have sold back to PHP and signed waivers releasing PHP from any fines (which likely aren't enforcable anyway, since preferred suffered no damages), or converted into a few hundred thousand shares of common. PHP has bought back AT LEAST 1.65M common, as of a few months ago, when PPH was higher. At these eye-popping bargain prices, I'm sure PHP has speedily scooped up the final 1.35M common to complete the 3M share buyback, all at MINIMAL expense. Also, Waterhouse Securities told me today that below $5, they won't allow shorting. They also said they have NO MORE SHARES of PPH available to short, even if PPH were above $5.