Moreover, even if I completely agreed with his argument that it
made sense for the modem business to be merged with a larger
modem manufacturer (which, in fact, does make sense), it does not
answer why the stockholders were not given equity in that merged
business. If the company was split, and the greater half merged
with another to make the main business viable, rightly the stock-
holders should have a share in both businesses or in the newly
merged main enterprise. That might be in the shareholders best
interest. It is in the interest of the corporate officers NOT to
do this, in order to force the current shareholders to essentially
finance the high-risk venture that remains. They have presented
no evidence that this is in the shareholder's interest. In fact,
I believe the shareholders have a legitimate complaint to take to
the SEC, since the BOD is charged to protect shareholder equity, and
this deal essentially places all of that equity at significantly
greater risk.
I still maintain the best solution would have been a mixed deal
with BOCA, providing $5million in BOCA shares to current shareholders,
and $5million cash to current venture which shareholders will own,
and if the current venture needs more financing, then that should
be raised by a future IPO or borrowing or other venture financing.
What the BOD has done essentially is taken advantage of the current
shareholders, who have held GVIL based on belief in prospects of
current product line, and forced them to give up equity in that
product line to provide venture capital for the remaining activities.
JMO |
