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Very interesting reading... This post attributes a lot of intelligence to the key players, with certain parties reaping huge benefits. It also smells to high heaven from a conspiracy-theory viewpoint, where some relatively unrelated issues are brought together to try to make sense of a situation that in my mind, is completely non-sensical and most likely due to blunders of various sorts (rather than a thought out plan)in the recent past.

I believe, that MFN simply made some faulty financing forecasts which led to some bad operational decisions, which led to panic course corrections and financial over-reactions which has brought everything to where it is today. The guys calling the shots at the top may be shrewd business people, but right now I believe that they are just trying to make the best of a bad business situation. I believe that they were just as surprized to find themselves in a mess. I do not believe that they or anyone else is masterful enough to create this whole situation for their own financial benefit. Perhaps one could exploit a situation such as this for personal gain, but to master-mind it????

I do agree with rule #1, which explains why Kluge is not doing a PG. He would be stupid to do so, if the money can come from somewhere else.

I do not agree that the insisted upon VF is any sort of insurance for the funders. In fact, in my mind its just another restatement of Rule #1. It's a question of where the money comes from. At this point, everyone wants to spread the risk to as many parties as possible. Including the vendors in this is a typical approach whenever a company gets into trouble and needs money beyond that which a bank (or whomever) is willing to put in the pot. Vendors have a lot to loose here too... why shouldn't they be willing to participate in the pain. And... it IS pain for them. Try extending any businesses normal 30, 60 or even a 90 day paying customer to 180 days or more. The costs of carrying a significantly higher AR can truely hurt, especially when the numbers get big.

I own about 5000 shares at ~4.50 average cost... I think its a keeper, even for those who got in well above where I did. The shrewd guys pulling the strings may hurt me somehow, by exploiting things to their own advantage. My bet is that they won't, because in the long run, it's not in their interest to do so. What's better for them, is to continue to work out this deal, spreading the pain and risk out to as many people as will participate, and then get shrewd about making it all work. The financial benefits of MFN as a successful company far outweight anything that comes to them from a failure.

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