Re: From today's Barron's
NOVEMBER 29, 1999
Up and Down Wall Street, Part 2
Up & Down Wall Street, Part 1
Ever heard of a wannabe IPO called Countryland Wellness Resorts?
No? Well, don't feel bad about it. Neither has Morgan Stanley Dean Witter, Donaldson Lufkin & Jenrette or Salomon Smith Barney.
Since Countryland Wellness Resorts is not yet a publicly owned company but, rather, as we say, an IPO hopeful, it's not surprising you haven't heard of it.
But since Morgan Stanley, Donaldson and Salomon are listed on the cover of the preliminary prospectus as underwriters, it's a bit weird that they plead innocent of any knowledge of the offering.
So weird, indeed, that we couldn't resist spending a little of Dow Jones's hard-earned money on phone calls to Las Vegas, where the company hangs its hat, and West Monroe, Louisiana, where its lawyer does business, to see if there wasn't a simple and logical reason for the underwriters denying any connection with the company they're purportedly underwriting.
The answer is there's no simple, logical reason and we're not sure there's even a simple, illogical reason.
What makes it all the curiouser is that the company has not only made the aforementioned investment bankers a party to the underwriting seemingly without their consent, much less their knowledge, but also usurped one of their traditional functions by pricing the shares itself.
We should gratefully note that Bill Alpert tipped us off to Countryland Wellness Resort. And we should also note that Pauline Yuelys, our research chief, and Teresa Vozzo, her trusty assistant, elicited the peremptory "nos" from the supposed underwriters when asked if they, indeed, were considering any such role.
Countryland Wellness, in case you wondered, intends to establish a Life Extension Club, which, in turn, will feature a Life Extension Program, that will test your genes and teach you how to live longer, if you're willing to sign up for a week a year for the next 10 years and fork over $30,000 in advance. Explains the company: "People like to live longer."
Frankly, its current business, prospecting for gold and silver in California, seems a tad remote from gene testing and helping folks to live to 100, but CEO Fred Cruz, variously listed in the prospectus as 75 and 77, is a podiatrist as well as an M.D., so maybe he's just the fellow to get the company off on the right foot.
We asked Dr. Cruz about the seeming contradiction between the listing of underwriters in the prospectus and their firm denials of any involvement in the underwriting. He explained that the company was still negotiating with the underwriters and cited a "subject to" clause in the prospectus, declaring that the terms of the offering were subject to an agreement to be entered into with the underwriters.
When we expressed puzzlement as to how you can be negotiating an agreement with underwriters who insist they are not in any such negotiations, Dr. Cruz pointed out helpfully that we likely spoke to the wrong person at Morgan Stanley. When we assured him we received an unequivocal denial from Morgan Stanley's official spokesperson, he suggested we talk to Countryland Wellness's lawyer, Donald E. Studer.
So we dutifully spoke to Mr. Studer and once more expressed our bafflement. Mr. Studer stressed that no agreement had yet been consummated with Morgan Stanley. When asked if the company was in the process of negotiating an agreement, he replied, "I think we are." Asked why Morgan Stanley denied any connection with the offering, he noted that "they are a big outfit."
When we pursued the subject, Mr. Studer repeated that no deal had yet been firmed up, which seemed the one unarguable fact our queries had elicited. When we reiterated his contention that even though the underwriters professed not to be in negotiations for an offering, negotiations were going on, he responded, "I am informed that's the case."
And who was doing the negotiating? A broker in Los Angeles, whose name he wasn't at liberty to divulge.
After mulling all of the above, we've come to the conclusion that it's a good thing Countryland Wellness Resorts has discovered the secret of living to 100. Otherwise, a lot of us might not live long enough to see it go public.
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