ERHC Energy Inc (ERHE)

[Strategyone]

Your last paragraph is close to what I see happening if rumors are true with a slight change. Your thought was:

"The only deal that would make sense is a buyin at $2 wherein the buyer absorbs all sellers on the public markets at $2 and then Offor sells however many of his shares to reach the previously agreed to share total. The problem is that doesn't fit with the rumor. The rumor is that Offor is selling a specific number of shares at a specific price vastly higher than the market price. That can't happen."

I see the interested party negotiating a specific price for Offors specified number of shares plus voting rights on his remaining shares. In addition, the company would probably offer the general shareholders the exact same price up to a similar percentage of their holdings (If they buy 40% of Offors shares they could offer the same price for up to 40% of everyone’s shares without a problem). The only reason for the purchasing entity to limit the number of shares they are interested in is if they didn't want more than a set amount. Since they are going for controlling interest, I feel they will offer to purchase as many shares as the common shareholder wants to sell at the pre-negotiated price.

If the negotiated offer is a stock swap, I may take the new entities offer up ONLY to a certain percentage and ONLY if it limits the tax liability of the stock swap. For short term cash needs, I will likely sell a small portion on the open market.

Think of this option. What if the buying entity is XOM and they offer a stock swap to the general shareholders that is equivalent to a $2.00 per share current price. I would likely take 10% - 25% of my ERHE holding and accept the stock swap (again only if it is a tax free exchange). This would give an immediate 300% gain and take the volatility and risk out of the converted shares. I may sell 5% - 10% over the short term to pull basis and get some "high risk" money out to play other stocks. Then leave the remaining 65% - 85% for the pop after oil is discovered.

Not saying the rumors are true but it is always wise to plan your own exit strategies based on set outcomes or material changes in the investment.

Good luck all,

Strategyone