Very curious chart for GENI. Never closes below $15:
siliconinvestor.com
Forbes also find the GENI trading curious:
"Since May, the price of the scant 2.8 million shares available for trading has curiously hovered between $15 and $18."
forbes.com
Fashionmall.com Gets Flashy
Buyout Offer
David Simons, Forbes.com, 01.02.01, 2:00 PM ET
Devotees of late-night TV pitches for exercise gizmos and get-rich-quick
schemes will warm to the buyout offer of Fashionmall.com, launched on
Dec. 29 by GenesisIntermedia of Van Nuys, Calif.
The $53 million bid for the New York provider of Web site ad space to
clothiers such as The Gap (nyse: GPS) and Talbots (nyse: TLB) is a 170%
premium to Fashionmall.com's (nasdaq: FASH) market value on Dec. 28.
GenesisIntermedia (nasdaq: GENI) also said it purchased 7% of
Fashionmall.com shares in the open market.
The stated attraction to Fashionmall.com is synergy with
GensisIntermedia's Internet-enabled video information kiosks for
shopping malls. However, 82% of Genesis' $32 million nine-month
revenue as of Sept. 30 was generated by infomercial-related promotions.
Another 12% came from a local car rental business acquired last April for
$4.4 million in stock.
Investors weren't as hooked as Genesis promises fish will be by its
Stimulure fly.
Though Fashionmall.com stock soared 59% to $4.12 on news of the offer,
it was far short of the $7 per share bid by Genesis. A lot of red herring?
Genesis offered $15 million cash and $38 million in stock. However, as of
Sept. 30, the company had only $1.6 million cash. The purchase of 7% of
Fashionmall.com stock would have cost $900,000 based upon the $1.71
average price during the 30 days prior to the buyout bid.
What's more, the cash offered is less than half of Fashionmall.com's $34
million stash of greenbacks and bonds net of liabilities.
Fashionmall.com chairman and controlling shareholder, Benjamin
Narasin, said in a statement Dec. 29 that the company isn't seeking to be
acquired, but it would evaluate the Genesis offer and report to
shareholders.
Genesis told reporters that to enable the buyout, it will seek to sell new
stock via private placement. That alone would reduce the value of its
shares to Fashionmall.com shareholders.
In making the buyout bid, Genesis seems to be taking seriously its "Free
And Clear" course for buying real estate at pennies on the dollar. Genesis
already has $48 million debt, including $41 million in loans, and its net
tangible book value is zero versus Fashionmall.com's $37 million.
With nine-month losses of $16.7 million, Genesis could use its Money
Mastery program. The company's third-quarter report projects that existing
credit lines and unspecified "future sales of our equity" will run out the
cash clock after June 2001.
The kiosk business alone lost $6 million on $229,000 revenue. Though
Genesis owns a graphic design firm, most of the 32 Web sites are drab,
static mall directories lacking even floor plans.
Fashionmall.com made news last June when it purchased for a reported
$400,000 the high profile, U.K.-based dot-bomb, online fashion store
Boo.com, which had closed six months after opening and burning through
$135 million.
In October and again on Dec. 28, Fashionmall.com rejected buyout offers
of $24 million and $26 million made by two small private investment
companies. Those bids have reportedly raised some eyebrows as
possible--but as yet unproven--attempts by their makers to manipulate
Fashionmall.com's stock price. The Dec. 28 offer was preceded by huge
spikes in Fashionmall.com trading volume on Dec. 22 and Dec. 27.
Apart from attracting questionable takeover offers, Fashionmall.com's
cash hoard is its greatest achievement. The business itself lost $3.7
million on $4.1 million revenue in the nine months ended in September.
That would immediately worsen Genesis' already sorry bottom line. But
the net amount of cash envisioned by the deal would slash Genesis debt
by 46%. And the immediate price pop in Fashionmall.com stock already
has beefed up the balance sheet.
Genesis went public in June 1999 at $8.50, raising $17 million. During
last year's November-March eye of the Internet stock mania, the shares
rocketed from under $5 to $35. By May, they had backed down to $15. Yet
despite dot-com-like financials, and lacking Wall Street research coverage
to buoy hopes, Genesis shares didn't join the subsequent deeper selloff.
Since May, the price of the scant 2.8 million shares available for trading
has curiously hovered between $15 and $18.
Genesis' first major TV promotion, a commodity-trading course named
"Trade Your Way To Riches," was discontinued after the National Futures
Association, the industry's self-regulating body, expelled and fined the
instructor for making misleading claims. The decision, affirmed last March
by the U.S. government's Commodities Futures Trading Commission, did
not charge GenesisIntermedia.
Still, the company's shaky finances and uninspiring kiosk effort leave a lot
to be desired in its bid for Fashionmall.com. Investors who belly up to the
deal could end up seeing the (apparent) value reduced far more than the
Genesis AbTwister would slim their waistlines.
In midday trading, Fashionmall.com stock was down $1.19, giving back
77% of Friday's buyout-enthused gain. |
