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Hahaha saying in his view Sydney after State election
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Date Posted: 16/01/03 11:11:52pm
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Posted by: hahahaa Jan 17 2003 5:40:24:357PM
Reply to post #3675 by jvd Go to Post #
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Hi JVD. Following is my view on the questions you raised. Whether it is right or wrong does not really matter. They are my view only.
1. The resolution to issue more shares to Motorola in place of the unlisted notes was part of the Nov AGM agenda and was passed. Motorola must at least have some interest in ERG shares before the AGM. It may have since become more greedy in view of further decline in ERG share price and may want to convert at a far more favorable rate. In the old days, it would be good to have Motorola on board because the smartcard technology was still at its infancy stage. With the smartcard technology now being matured, having Motorola on board would cause more conflict when ERG wants to go for non-Motorola technology that are much cheaper and better else where. This was also the reason why ERG wanted to get rid of Motorola 2 years ago.
2. I don’t think the NSW government can back out from the contract out, although they may be very concerned about the ERG financial. As long as ERG can meet the performance bond requirement, imo the contract must eventually be signed. NSW gov’t may stall the decision, but the decision has to be made sometime and it has to be ERG. I also think there is every incentive for the NSW gov’t to stall the decision to after the state election and until the ERG capital restructure is approved by the shareholders.
3. I agree with the auditor view that the financial of ERG is a going concern. An example which I have used a lot is that if I am going to build a house, I would not knowingly choose a builder that is in financial trouble. Even if the builder is covered by insurance, having to deal with a half done job when the builder collapse is just not worth the hassle. Also, there would be many sleepless nights hoping the builder will survive. I think the capital restructure now is far more important than the Sydney contract at this moment. Without it, any rebound in the share price would be short lived. Also, I don’t think ERG can get any new contract until the restructure is approved. No gov’t would want to take such risk.
4. This may sound laughable, I don’t think ERG would be too keen to get the Sydney contract before the restructure because it wants its share price to stay around 15 cents for the restructure to have a good chance of approval by shareholders. (If you do find it laughable, that’s good because I have done my good deed of the day.) I don’t think ERG would sign the Sydney contract at a lose, there is no point in doing it especially if you know the contract is your as a matter of time. Why throw away money that belongs to you? I hope ERG has learnt the lesson that it cannot afford to throw away money like it did before.
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