Mesa Offshore Trust (fka MOSH)

[Steady_T]

LV

I think that you misconstrue the proceedure.

There is a chance that some bidders will see the situation just as you describe it and not enter a bid. I think those would be companies that are interested in trying to get a low ball price in the first place.

The companies that are serious about winning will look at this and see that the situation is not really much changed by the presence of the preferred bidder.

Here is my thinking. The serious companies realize that they will have to bid more than the other serious companies are willing to pay to win, period. That includes the preferred bidder.

Here is where I think you misconstrue the preferred bidder process. After the bids are opened, the preferred bidder has the option of meeting the highest bid and thus winning the auction. However, if the highest bid is more than the the prefered bidder is willing to pay, then the preferred bidder walks away and the highest bidder wins.

Overall the dynamics of the bid process haven't changed that much. You can make the argument the the company that wants the property will know that they have to bid high enough to discourage the preferred bidder and will bid higher as a result.

The only way to know for sure is to talk to the folks who prepared the bids and ask them how the preferred bidder affected their bid choices. I doubt that anyone will take the time to contact people to see if they are willing to discuss it.

Bottom line is.... I don't see this as unmittigated evil like you see to.

I hope there is room for more than one point of view on this board.