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June 15, 2006

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Sundowne Financial

Or said another way management feels that the company equity is worth more than the markets valuation.

Trent

Eric,

Thank you for explaining some of the rationale. Part of your article appears to justify part of our premise:

"Underwriters LOVE these deals because the fees are very high. Bankers and issuing company executives also feel good because effort put into structuring a rather complicated deal (satisfying in its own right) results in superior terms for their shareholders. Believe me, every technology company over $2 billion in market capitalization is getting bombarded by bankers selling this same technique. Investment bankers get giddy sometimes."

While the bankers may be satisfied with both the fees and the intellectual thrill of a complicated offering, it seems fair for investors to be suspicious of the value being provided. Is there any way you could walk us through a similar issue, and how the economics work for the company, the buyers of the converts, and the existing shareholders?

Thanks,

Trent

John Hershey

Eric,

Nice post. You briefly touch on the call spread. Perhaps you can expand on that a little: how is it structured? Who are the buyers of such an instrument?

John

John Beck

Different investment opportunities includes high yield bonds as they have low influence of market direct impacts .

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