To: David Peterson
From: Cool Hand Luke
The debt relationship you describe is actually explained in a newspaper article yesterday by columnist David Evans. Evans frequently writes articles critical of Aura, Newcom, and Harry Kurtzman - and usually times them to coincide with periods of selling such as now. Thus the sell-off in Aura this afternoon.
I have my doubts about the accuracy of the article - which begins by describing Aura as a "money losing manufacturer of audio speakers". However, this $15 million loan to Aura is, in fact, secured by one and a quarter million of the nearly 8 million shares of Newcom that Aura owns. The proceeds of that loan to Aura were, in turn, loaned to Newcom, as part of the total loan package of just under $20 million made by Aura to Newcom, as described in the 10k.
The article devotes two paragraphs to the Dreyfus situation, and erroneously claims Shonberg was replaced in April. Hatchets are not known for their precision.
Now that most of the margin selling in Newcom is over, it will be interesting to see if the stock price floats back upward. 1 Q earnings are due out mid July, but I suspect the company may try to get them out sooner, since they are said to be positive. Dreyfus, by the way, has not sold a share of Newcom since early this year, and rumor has it that they don't intend to. |
