Marlin, I just recieved my annual report today and I noted two things that I would like to check my memory about and ask for yours and anyone elses reaction.
1) the annual report discloses that SKB invested $4 million in RIBI stock for 1,103,000 shares or $3.63 per share.They failed to give a specific date saying only its was "as of Dec.31 1996". I am ASSUMEING this was a market price.Question do you, or anyone else, recall any announcement of SKB investing in the Company? I can neither recall this nor can I find any reference to it on-line. What do you rememmber? They got warrants to purchase 500,000 more shares at $5.00 per share throughJan 1 2000 ( unless the company decieds to later sweeten it too)
2) RIBI extended the option expiration date from April97 to July 97 and cut the option price from$8.00 to $6.00. These were options that were issued in private placements in 91 and 92. PLEASE NOTE WELL that this is the second time mgt has adjusted both the option expiration date and the price. The original options were for $11.00 per share and to expire in April of 1995.Do you recall any annoucement of this?
The source for the above comments is page 14 Para 3 and 4. The history of the "adjustments " to warrant pricing and expiration dates is burried top of page 23. The new SKB warrant is put on page 29 para 3. I guess that I am happay to see SKB investing new money;however, it strikes me as potenially a sweetheart deal. If you reduce the implied purchase price of $3.63 for a warrant valuation, I have not as yet ran a valuation model, lets just say a $1.00 to $2.00 as a range, then SKB bought stock at an effective price of $1.63 to 2.63 while we the long suffering shareholders were paying between3.50 and 4.50. If things look so good for 1997 as the rest of the report wants us to believe, then why must the company resort to selling stock below market prices?
The private placement investors barginied for thier compensation in 91 and 92 when they made thier investment. When management failed to deliever on thier product development and the stock did not appreciate, then mgt. compensated the private placement investors by taking away the ownership interest from the regular shareholders. yes this effected managements % ownership as well, but they offset this by proposing more options for themselfs thus diluting us further.
Before I charge off and make an issue of this is your recollection the same as mine? Do you and anyone else see this the sameway I do? If this was not at a minium a very gray deal in terms of fairness to existing sharholders why was it done in such a behind the cutain manner?
Please, or ANYONE else, give me your reactions as soon as possible! I am really P.O. and would like hear others thinking and reaction prior to do anything. |
