From RB
Sorry this is long winded.....but it makes a lot of sense.....
FWIW since last year SJMB has acquired 5,428,183 shares of ICOM + an additional 430,642 shares held indirectly. Since then they have sold (as of June 30) 2,727,954 shares which leaves them with 2,700,229 + the indirect shares. P.S. they made a very healthy profit I might add of approx. 1,400,000 while still owning about half their position.
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The “sayers” of late, called naysayers and soothsayers, have had a few particular mantras. A few of the mantras are (sic) This stock will hit 52 week lows: Why would someone like Saint James be selling?; What does Saint James know that we don’t? This is intentional doubt raised, imo. Let the facts speak for themselves.
While I should thank such persons for forcing me to be a better-informed investor, I will not. The vitriol and unsupported cryptography they spew is for their own gain, at current shareholder’s expense. Their motives, methods, and even actual intent are more obvious all the time. I don’t fault anyone for taking advantage of the events taking place, as this is an opportunity that doesn’t happen often---depressed stock, previous company struggles, and systematic selling pressure ahead of the possibility of stellar growth in the industry and the company. But the methods and half-truths and hidden motivations are remarkable.
But to the point:
I thought that as a merchant banker, Saint James (SJ) was simply making a financial deal to their benefit and have stated so. A very a reputable poster, Herman, and possibly others, had said that SJ may have problems of their own to deal with. With his credibility, I was content to leave it at that. With the hysterics of others, I’ve looked for more information, and Herman couldn’t be more correct, enhancing in my mind his already unsurpassed credibility. This was not the intent of those who have defamed him of late. I think you will agree that quite the opposite of that intent will happen. Please be the judge.
The following is public information, and what we can’t and won’t know would have been even better reading. If these facts have been brought to light before, my apologies. The links to check for yourself are attached.
Saint James has two interesting relationships, one with Black Warrior Wireline Corp (BWWL), which is an oil and gas service company, and Industrial Holdings, Inc. (IHII), in the industrial manufacturing and distribution business. Both appear to be very closely connected to SJ and both appear to need the considerable time, attention, and money of SJ.
From SJ/IHII Public Information:
“The proposed Revised Agreement, which would mature January 31, 2001, would provide for a revolving line of credit up to the lesser of a defined borrowing base or $50 million. The Senior Lenders would waive defaults of loan covenants as of December 31, 1999 and March 31, 2000 and amend the loan covenants to require maintenance of minimum consolidated tangible net worth, and earnings before interest, taxes, depreciation and amortization ("EBITDA")- to-debt-service ratio as well as require limitations on capital expenditures. Management believes that the Company would be able to comply with these covenants. However, in the event that IHI would not be able to meet the EBITDA-to-debt-service ratio test, the proposed agreement would provide that this default may be cured by SJMB, L.P. ("SJMB") advancing to IHI funds in adequate amounts so as to bring this covenant into compliance. The proposed Revised Agreement would provide for interest at prime plus 3%.
In connection with the proposed Revised Agreement, St. James Capital Partners, L.P. ("SJCP"), a large shareholder of IHI, and its affiliate SJMB (collectively, "St. James"), plan to provide a $2 million guaranty to the Senior Lenders in order to secure any over-advances that may occur under the terms of the proposed Revised Agreement. In exchange for providing this guaranty, IHI would be required to (i) issue to St. James warrants to acquire 400,000 shares of its common stock at $1.25 per share and (ii) forgive a $0.35 million note receivable from SJCP. In addition, if the guaranty is funded, IHI would be required to issue to St. James up to 500,000 warrants to acquire its common stock at $1.25 per share, depending on the amount of the funding.
The proposed Revised Agreement, which would mature January 31, 2001, would provide for a revolving line of credit up to the lesser of a defined borrowing base or $50 million. The Senior Lenders would waive defaults of loan covenants as of December 31, 1999 and March 31, 2000 and amend the loan covenants to require maintenance of minimum consolidated tangible net worth, and earnings before interest, taxes, depreciation and amortization ("EBITDA")- to-debt-service ratio as well as require limitations on capital expenditures. Management believes that the Company would be able to comply with these covenants. However, in the event that IHI would not be able to meet the EBITDA-to-debt-service ratio test, the proposed agreement would provide that this default may be cured by SJMB, L.P. ("SJMB") advancing to IHI funds in adequate amounts so as to bring this covenant into compliance. The proposed Revised Agreement would provide for interest at prime plus 3%.
In connection with the proposed Revised Agreement, St. James Capital Partners, L.P. ("SJCP"), a large shareholder of IHI, and its affiliate SJMB (collectively, "St. James"), plan to provide a $2 million guaranty to the Senior Lenders in order to secure any over-advances that may occur under the terms of the proposed Revised Agreement. In exchange for providing this guaranty, IHI would be required to (i) issue to St. James warrants to acquire 400,000 shares of its common stock at $1.25 per share and (ii) forgive a $0.35 million note receivable from SJCP. In addition, if the guaranty is funded, IHI would be required to issue to St. James up to 500,000 warrants to acquire its common stock at $1.25 per share, depending on the amount of the funding.”
I’m sorry I couldn’t link more direct, but please see 6/14/00 PRNewswire listing at
nasdaq.com
Also,
“SJMBLLC, as the sole general partner of SJMB, is deemed to be the beneficial owner of all shares of the Common Stock of IHII held of record by SJMB. On April 14, 1999, SJMB acquired beneficial ownership through a distribution of 74,024 shares of Common Stock, which shares were issued by IHII to CDI Holdings, Inc. for the purchase of Manifold Valve Services, Inc., a wholly owned subsidiary of CDI Holdings, Inc. CDI Holdings, Inc. distributed these shares in satisfaction of amounts owed to SJMB. On June 10, 1999 SJMB purchased from IHII 349,580 shares of Common Stock at a purchase price of $7.4375 per share. On or about June 29, 2000 IHII issued to SJMB warrants to purchase 750,000 shares of Common Stock at a purchase price of $1.25 per share in satisfaction of certain fees owed by IHII to SJMB pursuant to the Belleli Engagement Letter, which was executed in connection with the acquisition by IHII of Belleli S.p.A.. On or about June 30, 2000 IHII issued to SJMB warrants to purchase 300,000 shares of Common Stock at a purchase price of $1.25 per share as partial consideration for SJMB's willingness to sell its interest in OF Acquisition, L.P. to IHII. On or about June 30, 2000 IHII issued SJMB warrants to purchase 400,000 shares of Common Stock at a purchase price of $1.25 per share as partial consideration for SJMB's guaranty of certain of IHII's indebtedness to its senior lenders.”
Same link as before, please see 7/20/00 13d filing:
nasdaq.com
Just my opinion and summary: SJ is into IHII sideways, and IHII needs help. SJ as a large shareholder is bailing out IHII, which was in or near some defaults, and additionally needs to have $2 million as security to keep senior lenders happy. SJ even owes IHII funds, which now may be forgiven, but relates to cash needs. At the same time, SJ was due fees for facilitating an acquisition by IHII, and now is receiving warrants, regardless if cash was expected. They are guaranteeing IHII indebtedness! SJ as usual cuts itself in to more equity stake for the effort. You may find your own additional information scrolling the company news. Recent quote on IHII, Nasdaq NM: $2/share.
From SJ/BWWL public information:
“Cash at March 31, 2000 was $35,600 as compared with cash at March 31, 1999 of approximately $369,000.
The Company's outstanding indebtedness includes primarily senior indebtedness aggregating approximately $17.2 million at March 31, 2000, owed to Coast, other indebtedness of approximately $7.1 million, and $20.9 million owed to St. James Capital Partners, L.P. ("SJCP") and its affiliates and certain of its limited partners. For the quarter ended March 31, 2000, the Company failed to meet the debt service ratio test under the Loan Agreement with Coast. The Company has requested and received a waiver of compliance with the covenant at March 31, 2000.
The Company's obligations under the Loan Agreement with Coast are collateralized by a senior lien and security interest in substantially all of the Company's assets. Principal and interest under the Loan Agreement has been guaranteed, subject to certain limitations, by St. James, principal stockholders of the Company, and Charles Underbrink, a partner of St. James and a Director of the Company. In addition, St. James has guaranteed all of the Company's obligations under the Loan Agreement, subject to certain limitations. The guaranty of St. James is backed by a pledge of certain securities owned by it, subject to certain limitations. Loans under the Loan Agreement were subject to the fulfillment of a number of closing conditions and the accuracy of the Company's representations and warranties in the Loan Agreement. By virtue of such guarantees, in the event of a default under the Company's Loan Agreement with Coast, Coast may seek to collect from SJCP and SJMB, L.L.C. ("SJMB"), as well as Mr. Underbrink, the outstanding principal and interest on the Company's obligations to Coast, and such person have advised the Company of their willingness and ability to meet such obligations. Mr. Underbrink's liability is limited to no more than $5.0 million. Such persons have further advised the Company of their willingness and ability to support the Company's operations at least through January 2, 2001 and in that connection have waived any default that may occur on indebtedness owing to them through April 12, 2000. Management may also seek to raise additional capital in conjunction with the Company's recent recapitalization, which may be either debt or equity capital or a combination thereof. Management expects that, upon conclusion of such a capital infusion, its indebtedness owing to St. James Capital Partners, L.P. and its affiliates and certain of its limited partners will be long-term or converted into equity securities”.. “Accordingly, the failure of the stockholders of the Company to approve the proposal to increase the number of shares of Common Stock the Company is authorized to issue will be a breach of a covenant under the note purchase agreements and a default under the notes. The default under the notes could result, at the option of the holders, in the notes becoming immediately due and payable and would also lead, under the cross default provisions of the instruments under which such indebtedness was incurred, to a default under all the Company's other outstanding indebtedness aggregating $37.9 million. Under such circumstances, the holders of such indebtedness, including Coast which holds $17.2 million of indebtedness secured by a senior lien on the Company's assets, could foreclose on substantially all of the Company's assets.”
See 10-Q at:
nasdaq.com
My opinion of the above: BWWL is low on cash, has senior indebtedness that it is out of debt service ratio and out of compliance. SJ, et al. are owed $20.9 million as subordinated debt, and are also guarantors of more senior debt. The verbiage speaks for itself. Ouch. Recent quote on BWWL, OTC/BB: .406/share.
It is hard to dispute that SJ has plenty of rather nasty and overwhelming irons in the fire, and despite any wish to keep ICOM stock, IF any, they have other ominous, pressing matters. I’m also less benevolent of SJ’s intentions to systematically sell off to the benefit of ICOM or its shareholders. They have plenty of motivations of their own that supercede. I think they were/are expecting a home run on ICOM just as much as we(longs) are, but stuff happens.
More opinion if you haven’t had enough already: A full court press is being put on ICOMs stock, and the opportunists abound before this company’s plans and results are fully implemented and then divulged. Do your DD, keep your knowledge and beliefs apart from the speculation, and hold and add to your position only if you’re comfortable. Enjoy the sideshows if you can…they are amazing. Comments welcome, and my apologies again for the length, and my editing because of it. This is just too important to ignore. Thanks. |
