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During 1997, Solv-Ex’s largest debt obligation was a $33
million convertible debenture held by Phemex Establishment
(Phemex), a Liechtenstein entity, which was created on April 21,
1996, under a convertible loan agreement. Solv-Ex was prepared
to assert offsetting claims against Phemex and its affiliates.
Phemex failed to file a proof of claim in either the U.S. or the
Canadian bankruptcy by the deadlines established for such filings
(January 31, 1998, in the U.S. bankruptcy). Therefore, Phemex
was deemed to have waived its claim entirely, and the claim was
disallowed in the joint bankruptcies.
Trading in Solv-Ex Common Stock
Before the joint bankruptcies, the principal market in
which Solv-Ex’s common stock was traded was the NASDAQ Small-Cap
Market. As a result of developments in the bankruptcy
proceedings, NASDAQ delisted the Solv-Ex common stock on
September 17, 1997. Thereafter, the stock traded over the
counter in what is commonly referred to as the “pink sheets”.
During the first quarter of 1997, Solv-Ex common stock
traded between a high of $21.50 and a low of $10 a share. During
the succeeding quarter ended June 30, 1997, which included
Merrill Lynch’s sales of pledged stock, Solv-Ex common stock
traded between a high of $14.125 and a low of $3 a share. As of
December 31, 1997, the stock was trading over the counter at
approximately $3 a share. The stock continued to trade over the
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