***Strong Sell & Short Sell Recommendation ***
EWEB (Euroweb Intl).
Fact:
EWEB, recently got a majority investment by KPN of Netherlands. The investment which accounted for a majority stake values EWEB beyond $2 ($1.58 to be exact). Include that the acquisition of a majority stake usually includes a premium over fair value of about 25% and the FV of EWEB is about $1 5/16.
"the number of Shares issuable under the Subscription Agreement will
be 10,286,742 shares of Common Stock at a purchase price of $1.58 per share for an aggregate purchase price for the Shares of $16,253,052; and the number of Option Shares issuable under the Option Agreement may be up to 4,822,194 shares of Common Stock at a purchase price of $1.38 per share for an aggregate maximum purchase price for the Option Shares of $6,654,628. "
sec.gov
More important:
Any shares of Common Stock issued by the Company to KPN at the closing under the Subscription Agreement in excess of 10,286,742 shares (with such excess shares being subscribed under the Subscription Agreement in such number as will be required to maintain KPN's holding of 51% of the issued and outstanding shares of the Company's Common Stock as a result of the issuance of additional shares of Common Stock upon exercise by third parties of options or warrants between October 26, 1999 and the closing under the Subscription Agreement) will be purchased at the purchase price of $1.38 per share.
Further more, I believe that KPN uses the recent run up in shares to hedge or immediately cash out their investment, everything else would be plain stupid.
Euroweb... has a long history of failed ventures.
-->Originally incorporated as Hungarion Teleconstruct, they held stakes in Tele Media Kft, TC Telecom, Termolang, and Tele-Plusz. All of these entities have been organised 1993 but all of them have been liquidated.
1994 they created the Austrian CEC which went under shortly thereafter. They worked together with the other venture, HTCC (Hungarian Telephone & Cable Corp, AMEX:HTC). CEC has been liquidated as of the company filing.
sec.gov
Also, EWEB enjoyed a 9.4% equity interest in HBCO (PinkSheets, delisted from Nasd in 99).
-->Upon their metamorphosis into Euroweb, they simply changed their name and the name of one of is hungarian subs. At the same time they needed money urgently and so they did a private placement with a 50%(!) discount.
Along with that exercise prices of the sweetener warrants have been reduced as the stock plunged.
sec.gov
--> In 1998 they tried to place 1M "Units" consisting of preferred stock and additional warrants with the aid of J.W. Barclay. As early as August 31 1998, they had to withdraw due to "market conditions".
sec.gov
--> Shortly thereafter they placed stock for way under $1 incurring high commissions and issuing sweeteners at $1.10. They mentioned that they have fallen below $2MM NTA (at the time a requirement for the NasdaqSC) before they sold additional shares.
Distressed as they were, they moved to issuing shares on a "best efforts" basis (like Techniclone recently).
sec.gov
-->They have been notorious late in their regular filings..., shows me a lack of interest when nothing is to cash in.
sec.gov
--> and BDO Seidman resigned as Auditors only in mid Dec 1999, replaced by KPMG.
sec.gov
By letter dated December 15, 1999, Euroweb International Corp. ("the
Company") received notice from its independent accountant, BDO Seidman, LLP ("Former Accountant") that the client-auditor relationship between the Company and the Former Accountant has ceased.
EWEB is a n-th tier play, and has been ran up simply because of the internet & Europe fad while there is little substance yet...
the Nasdaq asks EWEB to comment on trading activity and the company stays mum... .
As a result, I believe that EWEB will eventually trade at or below $2 once the fad is gone. |
