NVEI Press Release Misleads And Confuses Investors
By OTCNN staff
Published by OTCNN.com
11/20/2000 11:59 AM CST
New Visual Entertainment (OTCBB: NVEI) announced today that it had completed equity financing. That’s at least what the headline of today’s press release stated. Interestingly enough, nothing actually happened. The company announced already in September that it had received a financing commitment from Lilly Beter Capital Group that could result in up to $23 million in equity financing for the company.
In today’s announcement, NVEI stated that it had successfully completed its previously announced equity financing with Lilly Beter. But, then NVEI went on to state that as a result, the company MAY sell up to $5 million of its common stock, and MAY receive up to $24 million. In other words, the headline of the press release turned out to be grossly misleading. According to the announcement, there is no funding in place, except for those $315,000 that NVEI has received under this equity facility.
OTC News Network tried to reach Dodi B. Handy, the company’s investor relations contact at Continental Capital. Handy could not be reached. According to other Continental people familiar with the account, however, could not answer a simple question: was the funding in place or not. OTCNN also asked for Lilly Beter’s phone number to talk directly to decision makers to find out about their future intentions to fund NVEI, but Continental representatives did not have that at hand.
In the past two months, the company’s stock price has plummeted by almost 50%. Keeping this in mind, the terms of the equity financing package sound almost too good to be true. According to the company, it can sell its shares equal to 87% of the average market price of the common stock over the five days preceding the closing of each tranche. This amounts to 13% discount of the current market price, making a private long-term equity investment risky for the investors – after all, they would be making a long-term investment in a stock with a downward trend. According to Continental Capital, any investments would be for RESTRICTED stock with piggyback registration rights. In other words, unless there are any additional registrations, investors would be holding their stock for at least a year. The $29 million question is: how much funding and how soon will NVEI be able to secure with these terms?
New Visual is developing broadband transmission technology with the mission to utilize existing copper telecommunications infrastructure to deliver high data content to the home or office at VDSL (52Mbps) data transfer rates.
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