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

To: Ed Ajootian who wrote (4013)	1/5/1999 6:20:00 PM
From: Zeev Hed	Respond to of 5504

Ed, HEC will need much more then $150 plus million they have in cash to get the oil out, they already spent some money on buying back some stock at much higher prices, so I presume they did want to conserve cash. What is the use of dishing out $15 MM and then having to go into the market for "more expensive" financing later on? But HEC might also have wanted to prevent the issuance of an additional 7.5 MM shares on the option the floorless had to double up. The truth is that the floorless themselves may be gainers as well. According to the old agreement, by April 1999 they had to convert, and if indeed they use the preferred as a collateral for shorting on rallies (like the last two days), they can have another four or five such trips in the next year. Since these shorting event are relatively riskless to the bandits (and I am have to surmise they knew in the last few days that the change in their preferred will occur and thus covered some of their earlier short position when the stock went under $1.75 for quite few days and instigated the rally starting last Friday). From HEC's point of view, one of these days, if they indeed start and mobilize few rigs, they are going to hit a small gusher and crude may not stay that low for ever, so it gives them at least the hope that conversion will occur at higher prices. By removing the current repricing they remove the low ceiling, but on the other hand, the floorless feature is still there. Zeev