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| Subject: Re: February 10, 2003 | |
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Author: 1:44:49:340PM |
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Date Posted: 06:46:34 02/10/03 Mon In reply to: 1:12:00 PM 's message, "February 10, 2003" on 06:44:14 02/10/03 Mon Posted by: hahahaa Feb 10 2003 1:44:49:340PM Reply to post #3855 by worktogether Go to Post # Previous Respond Message List Hi worktogether. You said that 'i have checked all your posts, but non of them really answer my queries! All it said was It is no good to sell erg & convert into ergg, because there would be capital loss.' You must have my messages mixed up with others. I did not post the above messages. They were posted by someone else. The messages posted by me strongly urge people to convert ERG to ERGG. (Note: This is different from advising people to jump into ERG.) If you already own ERG shares, imo you should convert them to ERGG. My reply to your question 'if ergg holders accept it, is that mean they will be much better off to erg holders. For instant today erg price is $0.13 x 90 = $11.70 > $7.30 (current price for ergg)' is 'yes, you are 100% correct.' The only reasons I can think of people buying ERG and not ERGG are: 1. They think the ERGG to ERG capital restructure is going to fail. (If so, I don't understand why these people are still holding ERG shares, as a failed restructure imo will mean the end of ERG.) 2. They think ERG is going to make some big contract announcement before end March and the ERG share price will jump significantly. 3. Day traders are only interested in ERG shares which show greater price flutuation. The following are some of the related messages on the matter which were previously posted at this site. Hope they'll help. Cheers ==== Hi salus. Haven't heard from you since you informed us having sold your ERG shares at 12 cents a week or 2 ago. Have you been watching from the sideline? Would you consider getting some ERGG? imo, it is still a good buy at the present price of $7.60. Imagine that after the capital restructure, you get 90 ERG per ERGG share (i.e 8.5 cents per ERG share), plus about 50+ cents of interest per ERGG share which will be converted to an additional 3.33 ERG shares. As I've said many times before, the restructure must be approved. If it is not approved, it would be the end of ERG. If ERG has problem paying interest to the major ERGG noteholders last Oct, just imagine what would happen when April 1 come and the $9+ million interest payment is due the ERGG noteholders again. If ERG has struggled so long to make up its mind to payout Motorola $10 million in cash, I don't think it can come up with another $10 million to pay the noteholders on April 1. ======== The restructure eliminates the payment of interest to the noteholders, but also the face value of the notes which would also be required to be repaid in 2005 ($250 million). It was also stated that a strengthened balance sheet was necessary after September 11, due to increased levels of insurance bonds etc. When the notes were issued, the plan would have been to pay them out at maturity in 2005. However significant past losses (due to contract delays etc) required a change of plan. It would be extremely difficult for the company to raise cash through issuing more equity at this point(rights issue to existing shareholders) - even if it did the new issue would have to be at the current share price which is likely to be around 15 cents. Pessimist, you stated that you are unhappy about the dilution of your shareholding. As a shareholder, I too was unhappy when the restructure was first announced. I made the decision to switch to ERGG as I believed that on conversion I would end up with a greater number of shares. Time will tell whether this was the right move. I'd say that in total this board would amount to a very small percentage of shareholding between us. I don't think our vote will have an influence on the outcome of the restructure. In fact, I would be surprised if the directors (along with B&B) haven't got the votes in favour of the restructure organised already. Cheers and good luck. ====== Hi Lost - On "conversion" of ERGG,the ERGG notes are disposed of for capital gains tax purposes, and the new ERG shares are acquired. The sale value of the ERGG notes is not $13.50 (ie 15 cents for each ERG share issued) but the market value of the ERG shares issued. This amount may be different depending on trading at the time. For example, if ERG is trading at 10 cents, and the conversion takes place as currently proposed (90 shares for each note), the sale value of ERGG will be 90 x 10 cents = $9.00. The capital gain will be arrived at after subtracting the cost of ERGG (say $6.00), and balance being assessable. If you have sold out of ERG ordinary shares to acquire ERGG, you will most likely have a capital loss which you can offset, so tax will probably not be an issue. (Voluntary Disclosure:No Position Short Term rating: Long Term Rating:) OZeStock Advertisment:"Get yourself an institutional advantage!" Previous Respond Message List [ Next Thread | Previous Thread | Next Message | Previous Message ] |