Here's another good one that JUST happened: CSFB Denies Lending Link With EMEX
2001-05-23 16:01 (New York)
EMEX US $ Up 2 6 . 4 0 -2.86 R R16.71/17.24R 1x1 Equity M Q
At 12:59 Vol 91,400 Op 28.66 R Hi 30.08 R Lo 26.00 R ValTrd 2428694
M a r k e t Q u o t e M o n i t o r
E M E X U S EMEX CORPORATION page 1 of 1
Time Mmkr Size B I D A S K Size Mmkr Time
13:27 INCA 1 16.71 17.24 1 INCA 13:27
13:27 REDI 1 16.50 17.49 1 ISLD 13:27
13:27 ISLD 1 16.46 17.50 1 REDI 13:27
13:25 MKXT 1 16.40 24.00 1 NITE 13:16
By Carol S. Remond
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--News of a significant financing deal is often all it
takes for investors to bid up the stock price of a little company that's trying
to get bigger. The news is even more potent when it is a major Wall Street firm
that lends its name to the deal.
That's appears to be exactly what happened with EMEX Corp. (EMEX), a very
small mineral exploration company whose thinly traded shares have skyrocketed
more than 180% since the company announced in early April that it accepted a
$100 million project financing proposal that, according to the announcement,
appeared to have been arranged by Credit Suisse First Boston. Its market
capitalization zoomed to around $840 million.
There's only one problem: Credit Suisse First Boston says it never inked a
deal with EMEX.
On the surface, the size of this financing and Credit Suisse's involvement
seems odd enough. For starters, EMEX has booked less than $380,000 in revenue
for the past three years combined. Over that same period, it lost $13.8
million.
Before the announcement, the company still had a somewhat healthy market
capitalization of around $215 million. That said, it would seem unusual that a
major Wall Street firm would get involved with such a small company. And if it
did get involved, it should seem strange it would arrange a loan worth half of
EMEX' market capitalization.
This peculiar story begins on April 9 when EMEX issued a press release
announcing the $100 million in financing. In its press release, EMEX said it
"has accepted a proposal from a financial institution to arrange syndication of
$100 million in project financing" to build commercial plants that will produce
clean-burning fuel. In the next sentence, the company said "the deal was
arranged through the efforts of Credit Suisse First Boston, and is contingent
on feasibility studies and due diligence." The headline of the release trumpets
the $100 million syndication proposal.
EMEX went on to point out the importance of this financing. "Our technology's
potential has attracted significant capital, despite a relatively poor market
environment," said Chief Executive Walter W. Tyler in the press release.
If EMEX has attracted significant capital, it's not from Credit Suisse.
"CSFB isn't providing any loan to EMEX or underwriting or placing any
securities on behalf of the company," a Credit Suisse First Boston spokesman
said. The spokesman said the Wall Street firm sent EMEX a latter on May 18
asking management to clarify the facts from the press release.
An EMEX official disagrees. He says EMEX officials met several times with
CSFB employees to discuss financing. They later led the company to the ultimate
lender.
Credit Suisse officials don't dispute that some discussions took place.
According to people familiar with the matter, the financing discussions began
after a Credit Suisse private-client broker contacted a senior executive at
EMEX to see if the company was interested in any services the Wall Street firm
had to offer.
EMEX was interested in securing some financing. The broker promised to pass
that information along to the firm's investment banking unit, people familiar
with the matter said. After one meeting with EMEX, Credit Suisse investment
bankers turned down the financing proposal. CSFB then passed along names of
other financial institutions that might be interested in helping EMEX,
including a company called Fieldstone Capital.
"We found Fieldstone through them (Credit Suisse First Boston)," said Stuart
Schwartz, an EMEX attorney.
"CSFB isn't doing the financing but had a role in bringing us together with
Fieldstone. If people read more into that, then they shouldn't have," said
Schwartz.
The company lending the money, Fieldstone, was not mentioned in the April 9
press release although the better-known Wall Street firm that passed along the
name of Fieldstone figured prominently in the release. "We weren't too anxious
to make the name of our financing source available to our competitors,"
Schwartz explained.
Fieldstone officials couldn't be reached for comment. Schwartz said EMEX so
far has not received any money from the syndication commitment.
EMEX shares closed Wednesday at $26.40, down $2.86, on volume of 88,700
shares. The stock has recently attracted the attention of short sellers. Its
short interest went from 921 shares as of March 15 to 76,881 shares as of April
12. |
