Ladies and GentlemenThis company has a number of exposures. More...

Ladies and Gentlemen

This company has a number of exposures. More than most companies would have ever absorbed in the interest of all shareholders, why because most boards are very concscious of maintaining shareholder value.

To date, ERG has proven that it has mismanaged the capital base of ERG and we have seen existing shareholders continued to be diluted. A very clear example was the recent announcement regarding the private convertible note placement where the coversion of the notes will result in the dilution of shareholder interest. The basics are that the company has no cash to redeem the notes as it pursues alternative funding structures.

This company is in danger of falling over, looking for a big brother.

The mother load is the public convertible note. $250 million of debt. They can not continue to pay the interest on this borrowing. It is death sentence.

The choice is to convert this into equity, this will represent a desperate attempt to survive.

If this happens, then there are the existing shareholders that will be diluted once again.

I see no reason why anyone would convert the convertible note into shares other than the reaslisation that there is no other opportunity.

The noteholders want out and will want to exit with there pants on. The interest payment is around the corner and will question ERG's ability to make payment.

This company has a going concern issue, A balance sheet full of debt exposures. This stock is dangerous.

Do not trust this company and its announcement. The truth is the the Titanic went to the bottom of the ocean with few survivors. You can choose to survive or sink with the ship.