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IN THE MONEY: Sinclair Oil Ends Relations With Sulphco
By Carol S. Remond
09/27/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)
A Dow Jones Newswires Column
NEW YORK -(Dow Jones)- Independent oil refiner Sinclair Oil Corp. has
terminated its relationship with embattled desulfurization company Sulphco
Inc. (SLPH).
A person familiar with the matter said that Sinclair was unable to
independently replicate results from desulfurization experiments conducted
by Sulphco.
According to that person, Sinclair, which had been contemplating a 10%
ownership of Sulphco, demanded that Sulphco make a public announcement of
the termination in a letter sent to Sulphco last week.
Sulphco chose to make Sinclair's decision public by burying the news in a
press release Thursday announcing that two prototype desulfurization units
had been sent to an Italian partner. Earlier this year, Sulphco failed to
tell investors that Bechtel Corp., another partner touted in Sulphco's press
releases, had ended its business relationship with the company.
As reported in this column last month, Sulphco is under investigation by the
Securities and Exchange Commission. An agent from the SEC's Salt Lake City
office has been questioning officers and ex-employees of the company, as
well as Sinclair and Bechtel officials about their dealings with the small
Reno, Nev., startup.
People contacted by the SEC said the regulatory agency was particularly
interested in recent stock transactions.
Meanwhile, the decision by Rudolf Gunnerman, Sulphco's founder and largest
shareholder, to sell heavily discounted stock to Mark Neuhaus, a race car
driver with a bent for investing in tiny startup companies traded on the OTC
Bulletin Board, appears to have been the last straw.
Two board members, including newly appointed Chief Executive Stan McLelland,
have resigned following Gunnerman's decision to authorize the selling of 2.7
million freely tradable shares of Sulphco to Neuhaus at a price not to
exceed 72.5 cents a share. According to regulatory filings, both officers
had expressly rejected the deal during a Sulphco board meeting on Aug. 31.
In his resignation letter to Gunnerman, McLelland questioned the company's
decision to register stock for Neuhaus and his Coldwater Capital fund, by
using a form S-8 normally reserved for employee benefits.
McLelland said he was concerned that Neuhaus, who was "neither an employee
nor a consultant" didn't qualify for registration under Form S-8.
In essence, a form S-8 allows a company to register restricted stock in
order to allow it to trade freely. Insiders and investors that receive
restricted stock, often in lieu of cash, are normally unable to trade those
shares for a certain amount of time, usually a year or two.
It's unclear how many shares have so far been issued to Neuhaus. But what's
clear is that an investor with a large holding of freely tradable stock has
been damping shares in recent days.
On Monday alone, three large blocks - 200,000, 69,500 and 100,000 shares -
changed hands in this normally pretty illiquid stock. Sulphco stock recently
traded at 90 cents a share, having lost about 30% since late last week.
-By Carol S. Remond, Dow Jones Newswires; 201-938-2074;
carol.remond@dowjones.com |
