O' Unspoken Name, fellow Scatologists, et. al.
A Humble submission for you to Sniff,
courtesy of Lord Byron:
Made for Each Other: Wall Street Sleaze and
Anthony Robbins
By Christopher Byron
8/25/99 3:50 PM ET
Didn't you just know it ... that given enough time and a high enough average for the
Dow industrials, the day would sooner or later come when, like two jilted lovers on a
late-night prowl for satisfaction in all the wrong places, Anthony Robbins and the
Wall Street dot-com crowd would eventually find each other?
You know Mr. Robbins. He's the self-proclaimed reigning titan of motivational
teaching who claims to have put the get-up-and-go in the lives of big shots ranging
from Bill Clinton to almost anyone else you can think of.
That's what I need in my life: more get-up-and-go. I, of course, only know Robbins
from his cable TV infomercials, which ran for years on the tube, then dropped off and
now abruptly are back again. But you only have to see them once to know that
Robbins has so much get-up-and-go charisma, it's not funny. Check out those
chisel-chinned features, the blinding smile, the Billy Graham hand gestures.
Robbins is the man that Stone Phillips would be if he could get unstuck from that
five-nights-a-week Dateline meat grinder and spend some time practicing his smile.
My own personal favorite scene from Robbins' infomercials features Tony -- all 6 feet
7 inches of him -- lounging within the enveloping folds of what looks to be a $4,000
custom-tailored Brioni suit while declaiming to Leeza Gibbons (the obligatory
adoring blonde) as to how, upon discovering that poverty is not all it's cracked up to
be, young Master Robbins said to hell with this and went out and got himself rich by
"awakening the giant within" ... the result of which he now owns an island resort
somewhere in the Pacific.
That's what I want: my own island resort in the Pacific. I want to be like Robbins,
lounging on the veranda of my Moorish castle overlooking the azure Pacific, with my
own palm trees swaying gracefully in the distance, to the caress of my own trade
winds that are wafting luxuriously across the undulating green hills of My Own
Island Resort. Oh, yes.
That, at least, is what I wanted until that Tae Bo guy came along and filled my head
with a whole new set of cable TV infomercial fantasies. Now I want to be like him
instead: King Tae Bo, all rippling with muscles, shadow-boxing to rock music in
front of 300 sweating blond women adoringly undressing me with their eyes while
thinking, King Tae Bo, what a hunk! Oh, yes.
Meanwhile, it would appear that Robbins has caught the eye of the Wall Street IPO
tease machine (or vice versa) and has now embarked upon turning his motivational
message into investible common stock. Apparently Wall Street, or Robbins, or
both, think that common stock in Robbins is what I'll be wanting next. To which I
now respond, upon examination of the relevant documents that have lately been filed
with the Securities and Exchange Commission in the matter: Not on your life,
guys. I'd rather be beaten senseless by King Tae Bo.
The transaction in question, put together by some clever fellows at the Allen &
Company investment banking house, features a cheeseball maneuver that will be
instantly familiar to Eye to the Keyhole regulars: the so-called reverse merger into a
shell. This is a time-tested ploy used by companies that want to sell stock on Wall
Street but, for one reason or another, don't want to go through all the annoying
folderol of telling investors exactly what the company's financial situation really is.
To avoid doing so, the privately held company in question simply buys a defunct
penny stock shell company and thereby acquires all its existing stockholders and
their worthless stock in the process -- in effect, going public on the cheap in what
amounts to a stealth IPO.
For example, a now-defunct penny stock company might have started out in the
precious metals boom of the late 1970s as a $10-per-share Nevada silver mine. A
few years later and we might find the company bankrupted, a casualty of the
collapse in commodities prices in the early 1980s, leaving the shareholders stuck
with stock worth a penny or two per share. Then, in the fullness of time, a privately
held Internet company might come along and, seeking quick access to Wall Street
without having to go through an actual IPO, simply buy the defunct silver mine
company for a few thousand dollars, stick a dot-com in the name and instantly
capitalize on Internet fever.
That is the scenario that the Allen & Company crowd have now set up for Robbins --
the only difference being that instead of a busted silver mine, the Allen boys are
using a health-tech company known as GHS as the shell in this game of Wall
Street switcheroo.
Why GHS? No mystery there. Allen has been a major sugar daddy for GHS since
as far back as at least 1993, and as of February 1996 (and probably much earlier
even than that), the firm has held at least 2 million shares of stock in the company
at a cost that does not appear to have been much more than $1 per share. With
GHS now selling, in the wake of the news of the deal with Robbins, for more than
$13, the Allen stake has literally exploded in value.
Getting GHS all prepped up as a totally, completely, 100% worthless piece of
garbage so that Tony could acquire it for free, wasn't easy. That's because, while
GHS was essentially worthless, it wasn't totally and completely worthless, having
been involved for much of the 1990s in trying to make some money out of something
known as a gamma knife -- basically a kind of radiation machine for cancer surgery.
The business had never developed into the barn-burning operation that Allen had
apparently hoped it would when it first got involved back in 1993, but it did provide a
living of sorts for a couple of dozen people in a rented office down in Rockville, Md.
As of March 31, the GHS balance sheet thus showed $2.6 million of cash, $3.9
million of equity and about $2.3 million in annual revenue.
The question was how to get rid of all that without literally throwing it out the
window. Here's the ingenious answer the gang came up with: Simply "give" it to
GHS' current shareholders as a stock dividend, thereby creating a whole new
company to be known as USN, while leaving behind a completely hollowed out --
yet publicly traded -- shell company in the form of GHS.
Now, if I were an existing shareholder of GHS, I'd be pretty put out by that ploy
since I would already own the gamma knife business, anyway. Yet by having it
rammed down my throat as a stock dividend, I would now have to pay taxes on it as
ordinary income, but we won't go into any of that.
What matters is that into the emptied-out vessel known as GHS, Robbins has now
folded his business -- or at least what looks to be certain basically worthless parts
of it ... namely, a hastily concocted Internet operation going by the name
Changeyourlife.com. That operation (we'll just call it CYL for simplicity's sake) is
supposedly in the business of developing a Web site for "personal and professional
improvement."
But what's CYL worth -- I mean, really worth? Well, if you read the 10-Q that was
filed in connection with the transaction on Aug. 16, it ain't worth zeroski. Says the
filing, which presents the merged companies' combined balance sheets and other
financial data, "there was no book value for [CYL's] assets in the contributing
companies' books and records. CYL did not conduct operations prior to the
acquisition."
Oh, really? So, what, then, did Robbins get in return for this no-book-value, CYL
operation that had never done a lick of dot-com anything before he invented it to
take over GHS? Why, Tony got back 18.9 million shares representing 57.1% of the
company -- shares that are, as of this writing, worth more or less $13 each.
In other words, by doing nothing whatsoever except linking his name to a dot-com
Web site that didn't exist, Robbins almost instantly made himself nearly $246
million richer. I guess that's what awakening the giant within is all about -- why it is
that some folks can lounge around and look relaxed on their own Pacific resorts
while others get no closer than the sucker's side of their TV screens at three in the
morning.
Some additional chum has been tossed in the water in the hope of getting a feeding
frenzy going in the stock. That has come in the form of a side deal in which the
Learning Annex (that's the outfit that offers $100-a-class courses on topics like
how to pick up girls at the fragrance counter at Saks) has agreed to throw in its own
Web site (www.brainfuel.com) in return for yet more stock in the company.
But will GHS ever pay off for anyone except Toothy Tony? Some people who are
plenty rich already seem to hope so. The company's latest financial filings show
that, in connection with the merger, the company issued a "private placement" for a
tranche of convertible preferred stock (the so-called Series B shares) that raised
$15.1 million in what appears to be start-up money to help the Web site get going.
Be that as it may, developing a Web site up to Tony's exacting standards is
apparently no easy task. After all, the whole elaborate paper-shuffling fandango took
place in May, and it's now late August, which is to say three months later, and if
you were to log on to the Internet and try to call up the CYL Web site, what you
would get are three pages of "stay tuned"-type text promising some sort of
blow-your-mind Web site on how to improve your life -- if they ever get the site
finished. Meanwhile, the www.brainfuel.com Web site is even cheesier ... a
work-in-progress site that doesn't even identify who owns it.
But Tony's no dummy. His own Web site (www.anthonyrobbins.com), which isn't
part of the GHS deal and which he continues to own independently, remains as
busy as ever, flogging his tapes, his books, his seminars and whatnot to any and all
comers. Maybe he'll soon be offering motivational materials on how to get rich on
Wall Street by doing virtually nothing at all. Oh, yes.
>>That would be GHSI:BB, friends & countrymen. |
