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Technology Stocks : Avalon Group, Inc. -- Ignore unavailable to you. Want to Upgrade?

To: equalizzer who wrote (802)	1/9/1999 12:27:00 PM
From: OFW	Read Replies (1) \| Respond to of 1530

Thanks for that most recent post, Equalizzer. I think it is important that we all remember that the problem of the warrants is one that has always existed. When each us purchased our stock in Avalon we knew (or should have known) about the outstanding warrants which, if I remember correctly, total around 7.3 million exercisable at 13.7 cents. I think there might also another 1.5 million exercisable at 25.0 cents. As Equalizzer has pointed out this is a significant potential dilution which must be considered in pricing and acquisition. It is a problem that cannot be ignored and we should be careful not to blame AHS for any dilution which may result from these warrants. Having never before been involved in an acquisition of this type before, I assume that there are many separate questions which must be answered concerning the warrants - separate from the common stock - such as: Do warrants have to be exercised or are they convertible into new warrants in the new company? Are the warrants valued at the same level as the common stock? Etc. I hope that anyone on the thread who has experience in these fields might enlighten us as to how warrants have been handled in other buyouts. Finally, Equalizzer, one other point of concern. I have often heard companies describe a buyout as a "non-taxable event". Something to do with the IRS determining that the buyout itself does not trigger capital gains liabilities. Again, my lack of experience in these matters shows up, and am hoping you may have some knowledge in this area and how might it play in the Avalon/AHS deal? Thanks to both you and Eric for all you contribute to the thread. Offie