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  • RetiredPaperman RetiredPaperman Mar 9, 1999 9:27 AM Flag

    Are you Crazy-----

    future earnings dilution issue. The fact that PZN
    is issuing new shares to HSBC only dilutes your
    investment to the extent that HSBC pays less per share than
    you paid.

    For example, (I apologize for the
    simplistic example; I need things to be simple)if you and I
    start a business with each of us putting in $1 million
    and each of us having one share we each own 50% of a
    business that has a net worth $2 million. If we allow in
    two additional shareholders each putting in $1
    million and each getting one newly issued share, You now
    own 25% of a business worth $4 million, same as

    This example assumes the additional $2 million put in
    by our partners will generate the same returns to
    our business as our original $2 million did.

    If the marginal returns on newly invested capital
    equals our previous returns and if we sell equity at the
    same cost we paid there is no dilutive effect.

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