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Gold/Mining/Energy : Synex International Inc. (SXI.T) -- Ignore unavailable to you. Want to Upgrade?

To: Ally who wrote (13)	8/13/1998 3:59:00 AM
From: Dick Martin	Read Replies (1) \| Respond to of 42

I suppose that privatization and any deregulation would open up opportunities for a company like SXI and there is a demand for the power in the east unlike BC where hydro power is in oversupply. However SXI is still a very small company and power generation facilities are capital intensive so the company has to be careful about which project to develop. There probably are better investment possibilities for the company in places (internationally) where the needs are more in line with what the company can deliver. This is why I think that the relationship with New World Power Corp is a great development. The debt load the company can carry is a good question, an example of this sort of problem is New World Power Corp. which had to sell most of its assets to reorganize. I don't think Synex will get itself into this sort of a mess but if Synex is to grow it will have to use its borrowing power wisely. I think Hydroelectric assets are very stable investments so have a stable value to borrow against. The current situation is is complicated by the Yongnian Cogeneration Plant under Synex Noram Power Corporation. I understand that Synex wants to bring in other investors to participate in the project but I don't know how the equity would be spread out or what other parties would participate. With the Asian economy as it is, this may be one reason why the shares have been weak. Now Synex is developing internationally we have to factor in all the things that go with that; foreign exchange, international politics, regional economics. Dick Martin

To: Ally who wrote (13)	8/17/1998 11:49:00 PM
From: gsun	Read Replies (1) \| Respond to of 42

dt: Delayed response due to my holidays (thank you Dick Martin for your response). There may be opportunities for SXI depending on how Ontario Hydro is privatized. SXI would likely focus on the smaller plants as the capital requirements are far less and operational efficiencies more likely to be achieved. Maximum debt level for hydroelectric plants (assuming long term power sale contracts and long term debt) is about 80%. The debt on the software division is nearly zero as it has effectively no fixed assets (only software code and reputation) and sells most of its product outside of Canada. I am uncertain how one would determine an acceptable debt level rather it is more important to match the debt payments to the dependable income stream and thereby avoid excessive exposure to interest rate changes. gsun