If we look closely at what MRVC said about the New Access equity, they said:
1) they had acquired 19% of NAC for $950,000 in July 1998. This is $50,000 per percentage point.
2) They had warrants in two stages that had to be executed BY July 1, 1999 and January 1, 2000, that would give them "approximately" 60% at an additional cost of $2,050,000. That additional 41% also works out to exactly $50,000 per percentage point.
Now, apparently they exercised the January 1, 2000 warrants early, as they said in the Q2 CC they now had a majority position.
Now, why just 55% ownership? Possibly:
A) NAC diluted MRVC's position slightly via additional shares issued (employees?).
B) MRVC exercised enough warrants to give them control, but still has other warrants they can exercise before 1/1/2000.
C) Some other transaction occurred here to lower MRVC's ownership prior to the JNPR transaction (whatever it is).
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P.S.
In thinking about it I bet B) is the answer. They only earned $0.02 in Q2, which is about a net $540,000. That additional 5% would have cost them another $250,000, reducing Q2 to only $0.01 - below what the street was expecting. I bet they bought what they could and deferred the rest. |
