Everyone-first, if you read my most recent post here you will see that I am completely out of CSGI stock and waiting for a new entry. With this said, and with everyone's knowledge that I mean no disrespect for any company or individual, I find this most recent SEC filing to be very troublesome. I think there is cause for great concern and vigilance on everyone's part.
This filing has more to do with dilution of shareholder value than an anti take over tactic and is as close to a Reg S filing as one can go without calling it a Reg S filing, in my opinion. This filing will allow more stock to be given to insiders to the company, meaning employees, and give the company the ability to raise additional working capital to continue operations down the road. It will also allow the company to issue shares of stock in private placements or as part of negotiated deals for future services.
The anti-takeover verbage is the weakest I have seen. The issuance of the additional stock will definitely have a dilutive effect on the hostile party but it will also dilute the shareholder value for the loyal investors, the way I read this filing.
I do not make these comments lightly and base them on the wording of the recent(this year and this month) filings and information packages sent to me by both UTEK and CFMT, amongst other companies, regarding anti-takeover measures or a Shareholders Rights Plan. Their programs are a great deal more specific and create either preferred shares or additional stock purchase plans to the existing stockholders but not the acquiring party. In other words, the "Poison Pill" plans clearly outline what would happen if an unfriendly situation arose.
For instance, CFMT provides for a dividend distribution of Rights to purchase shares of a newly created Series A Junior Participating Preferred Stock. Under certain circumstances, the Rights could become exercisable to purchase shares of the Common Stock of the Company, or securities of an acquiring entity, at one-half market value. the Rights may be exercised only if certain events occur and we bcame owners of one Right for each share of Common Stock you own.
Please do not misinterpret my statements here. The wording of the document from CSGI seems to be extremely pathetic, weak, and extremely vague to me but the intentions of CSGI may indeed be honorable. I have come across numerous Shareholders Rights Plans over the course of the last few years and this one is, by far, the worst I have ever read. That does not mean worse plans do not exist nor does it mean that CSGI may realize they need to come up with a stronger plan, wording, or restructuring of this anti takeover measure. It just means that the anti-takeover portion of this document leaves alot to be desired, In my opinion. The vaguary of the Shareholder Rights Plan is contrasted by the very specific outline of how the additional shares can be used in a non-takeover manner (which I beleive to be dilutive).
However, according to the list of beneficial owners and the way the vote is structured, the majority stockholders will prevail in their desire and do not need general stockholder approval. A small group of people control enough shares to control the outcome of the vote. In essence, it is more of a rigged election. Do not get me wrong about this since I can name a good many more companies other than CSGI where this same situation exists. That is the nature of the beast and we all should have been aware of this when we researched who controls what shares.
My apologies to anyone that this may unknowing offend but I would print the same message if I saw this relative to UTEK, ALYD or any company you may believe I am a major supporter of. I issue this message as a voice of caution and not as a negative commentary degrading CSGI as a company or degrading any supporter of this stock.
Furthermore, if anyone finds these comments extremely offensive, I will gladly ask the webmistress to delete this message should anyone post a reply requesting me to have it deleted.
Andrew Vance |
