Vitech America tackles Brazil Message Board

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Technology Stocks : Vitech America tackles Brazil

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To: dave luken who wrote (63)	6/23/1997 12:04:00 AM
From: Michael Burry	of 153

The company purports that its cash burn is due to the establishment and expansion of its manufacturing operations in Brazil. This sounds reasonable. If the company can get 20% on loans from the padre instead of the 30% from Brazilian banks, why not? Is Scholl saying that dad is just kissing his money good-bye -- all that stock and the 10 million in loans held by padre doesn't seem to suggest that dad thinks the business is a sham. Even Scholl admits that padre is if anything a good businessman. The options priced in the 15, 20, and 25 range also don't suggest that quick money was the goal here. While the article focuses on Asher, it ignores the fact that the St. Laurent sons are intelligent and well-educated. Presumably dad is too. Are they really just running the company into the ground? IMO, once the manufacturing expansion is complete, Vitech's cash flow will improve and they'll be able to pay back dad and others. This manufacturing project, while draining now, bought Vitech favorable tax terms for quite a few years. Further, Intel just granted a $3M credit facility to Vitech as well as the right to use the Intel Inside logo. Are we to believe that Intel did not investigate this company before granting the facility? This company isn't dead yet,though the stock may be thanks to Barron's hatchet. If nothing else, the stock action and the company's response will certainly be interesting over the next few days. Good luck and good investing all, Mike

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