Here is your letter, I drafted a letter to E-mail to the CHRB and in trying to CC it to you guys I lost the whole thing. When I rewerite it I will just post it to this group. Also, I am looking at some of the previous SEC filiongs and have included some relevent portions. It appears that the some owner of the Series B convertable stock must have chosen to convert to common shares given the low share price. (I would too, it doesn't appear to have much downside at this point, and the way the formula is set up the lower the share price the greater value of the convertable share). BTW, ther are only 186 shareholders of CHRB, so each of our voices may hold some weight. Also I am quite upset that none of us have received ballots. With the meeting scheduled for Tuesdday, even if we get our letters in the mail tomorrow I doubt our vote will be cast.
Khris's letter:
Subject: CHRB shareholder value and current price levels
Date: Sat, 28 Dec 1996 00:17:51 -0800
From: Khris vogel <khris@baker.cnw.com>
To: cfo@chrb.com
CC: John Conlee <johnc@cio.net>, tonygier@worldnet.att.net, mullinsv@pilot.msu.edu, khris@baker.cnw.com
Dear Mr. Tam,
In November, you responded to an e-mail I had sent you regarding China
Resources. One of the questions I had was asking if the company would entertain the thought of buying back some of its common stock at the levels it was trading at the time. You responded to me, "We have thought of buy back of stocks in the market but the general consent from our directors is that we hope to have as little direct intervention in the stock market by us as possible and our main direction will be to involve more public relations work to bring the public investing interests in our company."
As a stockholder of CHRB common shares, I'm rather concerned re: the
continuing detoriation of the share price. Does management have any
plans in place to enhance shareholder value? You mentioned above that
the directors have little desire to intervene in the stock market. But as a shareholder (i.e., a part owner of the company), don't the directors have an obligation to me and other shareholders to act upon the share price decline, especially in light of the relatively good cash position of the company?
Mr. Tam, I think that CHRB offers uncommon value at the current price,
trading at an extremely low price-earnings multiple, all the while you've been able to continue earnings growth. But I wonder if the co.'s directors and/or management has the same view on the company's prospects. If so, wouldn't it make sense for the company to act in the best interests of its shareholders and buy back some of the outstanding shares or perhaps take other action that would quickly and clearly translate into shareholder value?
Please bear in mind that, besides just the drop in the share price, much of what is driving my questions and comments is the additional shares that have been issued as of late resulting from exchanging of common shares for convertible preferred shares has further diluted the value of my holdings. To possibly risk beating the above points to death, at what point does the co.'s directors deem it appropriate to take action in the interest of the common shareholder? I find that I must respectfully disagree with your comments regarding the increase of public relations by the co. as a way to support the share price. One can easily argue that all the public relations in the world will not offset a lack of action on the part of co. directors who are seemingly indifferent to the plight of their shareholders.
I thank you for your time, as I anxiously await your thoughts as to the above.
Regards,
Khris Vogel
From SEC filing:
"During the nine months ended September 30, 1996, the Company issued
1,283 shares of series B convertible preferred stock at US$10,000 per share, with a gross proceeds of US$12.83 million. As of September 30, 1996, 300 shares of series B convertible preferred stock were still outstanding. There has been no other significant change in financial condition and liquidity since the fiscal year ended December 31, 1995. The Company believes that the net proceeds from its capital raising efforts, together with internally generated funds, will be sufficient to satisfy its anticipated working capital needs for at least the next 12 months.
Each share of Series B Convertible Preferred Stock shall be
convertible into shares of the Corporation's Common Stock, $.001 par value (the "Common Stock"), at any time during the two-year period commencing on the 45th day following the date of the closing of the sale of such share (the "Conversion Period"), upon delivery to the Corporation by the record holder thereof of a notice of conversion
(the "Conversion Notice") and the surrender to the Corporation at its
corporate offices at 2440 South Progress Drive, Salt Lake City, Utah 84119, or at any other place designated in writing by the Corporation,
of the certificates for shares of Series B Convertible Preferred Stock
to be so converted. The number of shares of Common Stock issuable upon
conversion of shares of Series B Convertible Preferred Stock shall
equal the number of shares of Series B Convertible Preferred Stock to
be converted, multiplied by $10,000 per share (the "Share Price"),
divided by the Conversion Factor (as hereafter defined). "Conversion
Factor" means the lesser of (a) the product derived by multiplying (i)
the average closing bid price of the Common Stock on the electronic
inter-dealer quotation system operated by Nasdaq, Inc., a subsidiary
of the National Association of Securities Dealers, Inc. (the "NASDAQ
System"), for the five consecutive trading days immediately preceding
the date of the delivery of the Conversion Notice to the Corporation
by (ii) 69%, or (b) the product derived by multiplying (i) the average
closing bid price of the Common Stock on the NASDAQ System for the
five consecutive trading days immediately preceding the date of the
delivery of the Subscription Agreement for the related shares of
Series B Convertible Preferred Stock to the Corporation by (ii) 85%.
Upon the expiration of the Conversion Period, all remaining issued and
outstanding shares of Series B Convertible Preferred Stock shall be
converted as of such expiration date into the appropriate number of
shares of Common Stock in accordance with the above-referenced
formula." |
