Just found out Paramount put in 5000,000 into the Enzon placement. I am going to post a story on two other companies that Paramount and Aries were involved and get comments.
Those of us who thought it was "obscene" (as I did) that the Aries Funds would reap a
quick 140% profit on their $5 million investment in Innovir last August must be positively
nauseated (as I am) by the terms of the most recent version of the VIMRx/Innovir deal
announced last week (Jan. 2).Some of us might even find this transaction so outrageous
that we might be inspired to demand an explanation from the company (I know I will !)
Before I attempt to justify the above assertions, I think it is important to understand the
chronology of the Vimrx/Innovir/Aries Funds relationship over the past few months. It's
a very complex scenario but, after spending a great deal of time with SEC documents, I
think I've been able to simplify the sequence of events.Here it goes...
August 30, 1996: Aries Funds take controlling interest in Innovir Laboratories. The
terms, taken from the Innovir 10-k filed on December 30, 1996, are as follows:
" In August 1996, the Company completed a private placement whereby The Aries
Fund, a Cayman Island Trust and The Aries Domestic Fund, L.P. ("The Aries
Funds"), two affiliated investment funds which specialize in the biotechnology
industry, have invested a total of $2 million in exchange for four million
shares of newly issued common stock of the Company and four million Class C
Warrants exercisable at $.50 per share. In addition, the Company has issued to
The Aries Funds options to purchase an additional two million shares of common
stock and two million Class C Warrants (the "Funds Option"), for a total option
purchase price of $1 million."
Sept. 3 - Sept. 18: VIMRx Begins Negotiations To Acquire Controlling Interest In
Innovir*
*By way of explaining why there was a $4.50/share cap on the average trading price in
the original agreement, the company told me that "the stock was trading around $4.50
per share at the time we started serious talks with Innovir". The only time that VMRX
shares traded at or above $4.50 was during the period cited above so that had to be
when the talks began.
Sept. 27, 1996: The Aries Funds File S-3 With SEC To Sell 12 Million Shares Of
Innovir
Sept. 27- Nov. 22: VIMRx Shares Plunge From 3 31/32 To 2 13/16; No News
Nov. 22, 1996: VIMRx Announces Purchase Of 9.5 Million INVR Shares From Aries
Funds For $12.350 Million Worth Of VIMRx Stock Valued At Average Trading Price
From Nov. 15, 1996 - Jan. 15, 1997.*
* in other words, the Aries Funds would receive over $12 million worth of Vimrx stock
for INVR shares that, once they exercised their options, would have cost them $5
million only a few months earlier.Furthermore, the deal was structured in such a way as
to provide the Aries with a vested interest in seeing VMRX shares trade as low as
possible through January 15, a process that, perhaps coincidentally, began to occur on
or about Sept. 27 and well after VIMRx had approached Innovir about an acquisition.
Nov. 22 - Dec. 13: VIMRx Shares Continue Downward Slide Closing At 2 9/32 On
Dec. 13*
*the average trading price of VMRX shares from Nov. 15 through Dec. 13 was 2
20/32 and the stock showe every sign of heading lower. There seemed to be no support
and some evidence of downward manipulation. At an average trading price of 2 20/32
the Aries Funds would have received about 4.7 million shares of Vimrx. It was looking
as if, with the share price headed lower, they might end up with more (for example, an
average trading price of $ would have given them more than 6 million VIMRx shares,
etc., etc.)
Dec. 16, 1996: Dunning Receives Shareholder Complaint Re: Several Aspects Of
Innovir Deal Including Dillutive Effect Of "Average Trading Price" Clause; Letter Poses
Seventeen Questions Concerning Various Aspects Of Deal And Suggests That Further
Measures Might Be Taken To Protect Shareholders' Interests.
CONTINUED |
