Allen-Vanguard Rescue Board Message Board

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Technology Stocks : Allen-Vanguard Rescue Board

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From: knuckls	9/17/2009 2:21:44 PM
	of 724

I knew we would all converge somewhere. Anyways, I contacted an individual about this situation to try and get some perspective and info. FYI, they are not tied to VRS or Versa, simply someone versed in corporate and equity laws etc. My first question: Why/How is this transaction able to happen outside of bankruptcy? Reply: The value of the firm is equal to debt + equity, and the value of debt is fixed by the contracts. When debt exceeds or equals the value of the firm, the shareholders no longer own any of the firm's assets. Simply, the creditors and bondholders are owners of the firm's assets. Next question: Even though shareholders have no value, will they still be given the right to vote on this transaction? Reply: I wouldn't expect they would in this case since they have no claim on any of the firm's assets. The board is supposed to act in the best interests of the shareholders, but since they aren't really owners anymore, I expect that the courts would rule that this decision was in the best interests of preserving value for the debt holders. THE END. Basic stuff, but gave me some insight into the thought process behind this. Hopefully some good can come of this. The extremely long takeover talks are very suspect. I have emailed OSC.

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