heres the final one from local paper. hopefully this will be my one bad investment for a long, long time. How do you get capitol gains losses for a bankrupt stock?
Omni shareholders left out in the cold
Tuesday, March 24, 1998
By Chris Pope
Telegram & Gazette Staff
WORCESTER-- Shareholders of Omni Multimedia Corp. appear to be out of luck after yesterday's sale of most of the company's assets.
ÿ ÿ ÿ ÿ ÿThe sales agreement between Omni's chief lender and a new company formed by Providence investor Thomas DePetrillo, would turn Omni Multimedia into a private company. As a result, the ownership interest of Omni Multimedia shareholders in the company is, for all intents and purposes, extinguished, according to lawyers familiar with the case.
ÿ ÿ ÿ ÿ ÿAccording to its new operators, however, Omni's 250 employees will remain on the job as the embattled maker of CD-ROMs and music CDs attempts to fight its way back to profitability as a new company under new ownership.
ÿ ÿ ÿ ÿ ÿ"We've got a world-class facility, and this is our chance to prove it. We've been given a second chance," said Richard A. Pilotte, Omni Multimedia's vice president of operations and the only member of Omni's former management team still with the company.
ÿ ÿ ÿ ÿ ÿPaul F. Johnson, Omni chief executive officer and president, and Robert E. Lee, executive vice president and chief financial officer, relinquished their positions with Omni on March 11. Whether the two men have actually resigned remains unclear.
ÿ ÿ ÿ ÿ ÿOmni and its subsidiaries filed for Chapter 11 bankruptcy protection in November after reporting assets of $7 million and liabilities of about $36.6 million. The company reported losses of $15.6 million for its last fiscal year.
ÿ ÿ ÿ ÿ ÿOmni's chief creditor, Coast Business Credit of California, has been in control of operations since March 12, the day after a U.S. Bankruptcy Court judge ruled that Coast could foreclose on its $4.5 million loan to Omni.
ÿ ÿ ÿ ÿ ÿIn a hearing yesterday, Judge James F. Queenan Jr. denied a motion calling for the court to place operating control of the company under the U.S. Trustee's office. Instead, Queenan found that Coast Business Credit can continue running Omni as the "mortgagee in possession," pending sale of its assets.
ÿ ÿ ÿ ÿ ÿAlso yesterday, Queenan appointed Whitton E. Norris III, lawyer for the committee of Omni's unsecured creditors, as representative of Omni's bankruptcy estate.
ÿ ÿ ÿ ÿ ÿPatrick G. Waters, lawyer for Coast Business Credit, said the judge's ruling cleared the way for a sale of Coast's collateral in Omni Mutlimedia to OmNet Technology Corp., a company formed by DePetrillo, who told the court that he is the owner of about 10 percent of Omni Multimedia's publicly traded stock.
ÿ ÿ ÿ ÿ ÿOmNet Technology signed a letter of intent to purchase Coast's collateral last week, but the sale was not completed until yesterday's hearing concluded. Under the terms of the deal, OmNet Technology bought the bulk of Omni Multimedia's assets from Coast for $4.5 million.
ÿ ÿ ÿ ÿ ÿSince the sale is being financed by Coast, however, no money will actually change hands. Meanwhile, OmNet Technology lawyer Bruce Frankel said OmNet will add $1 million in capital to the new company.
ÿ ÿ ÿ ÿ ÿAccording to Frankel, now that the deal between OmNet and Coast is concluded, OmNet will try to purchase the remainder of Omni Multimedia's assets, namely tax credits resulting from Omni Multimedia's business losses and its listing on the American Stock Exchange.
ÿ ÿ ÿ ÿ ÿWhile Omni Multimedia's existing stock no longer trades and appears to be worthless, according to lawyers knowledgeable with securities law, Omni Multimedia's listing on the American Stock Exchange could be used as a vehicle to issue new shares in OmNet Technology Corp.
ÿ ÿ ÿ ÿ ÿDePetrillo declined to comment on his intentions for OmNet. |
