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Microcap & Penny Stocks : CINEMASTAR LUXURY THEATERS (LUXY)
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To: John Arnopp who wrote (35)12/12/1997 10:00:00 AM
From: Brad Zelnick  Read Replies (1) of 85
 
now that i have had time to read the prospectus, my advice would be to run, not walk to the nearest exit. Clearly this company was run in a fashion that was to benefit management, not shareholders. While old management was flying the enterprise into the ground, they were awarding themselves consulting contracts and bonuses which they would get regardless of how the company did. Clearly, without recapitalization, the thing was Chapter 11, or 7. They were running on fumes.

A look at the agreement shows that there are some huge outs left for Rust et al. If TJ and SB show losses over the next THREE years, the new boys can award themselves new stock to cover it. who knows what dreadful stuff will emerge when the books are fairly done. A reasonable guess would be that current share value will be sacrificed by old management to preserve these shabby inside consulting-bonus deals they awarded themselves.

It looks to me like they will have removed ALL shareholder value without the expense of a bankruptcy proceeding. Anyone who buys at this point in time is a lot smarter (or dumber) than I am.

Good Luck,

Brad (who carries an eleven foot pole because there are somethings he wouldn't touch with a ten foot one)
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