IMPORTANT COMMENTS REGARDING UPCOMING AVAL SHARE CONVERSION:
I wanted to take this opportunity to post to the thread my findings about certain aspects of the upcoming conversion of AVAL shares into the new private Stayhealthy.com (otherwise known as Appropriate Health Services.com) --- shares:
1. I spoke with ETrade today and they informed me that the conversion is set for Thursday, May 27th. The conversion would normally take place at that time on a 1 for 8 basis, one share of Appropriate Health Services.com for every eight shares of the old Avalon Group (AVAL).
2. There is one aspect of the conversion of which many may not be aware and I wanted to update the thread on that provision.
The Merger Agreement approved by the Avalon Board of Directors on April 12, 1999 provides that a set percentage of the shares converted be temporarily heldback from investors for the purpose of readjusting, if necessary, the share ratio --- something which I do NOT believe anyone believes will be necessary.
The exact terms are as follows:
A. 85% of the converted shares will be released to the stockholder upon completion of the merger (the Effective Date) --- these would be the shares which all will receive upon the conversion which ETrade says is set for May 27th.
B. 15% of the converted shares are temporarily withheld - placed in escrow - scheduled for release on the following basis provided that "the representations and warranties of Avalon and the Avalon stockholders as set forth in the Merger Agreement as true and correct in every aspect":
One-third (5%) to be released 120 days after the Effective Date.
One-third (5%) to be released 280 days after the Effective Date.
One-third (5%) to be released 360 days after the Effective Date.
The Effective Date is defined in the Merger Agreement as the "second business day following the satisfaction of waiver of all conditions precedent to the Merger unless another time, date or place is agreed to in writing by the parties . . . the Closing is currently expected to occur during April, 1999."
While I am not positive of the actual effective date, let me use April 15th as the effective date for purposes of the following example which assumes that one owned 100,000 shares of AVAL:
CONVERSION: 100,000 shares of AVAL is converted to 12,500 shares of the privately held Appropriate Health Services.com (AHS/STAY)
10,625 shares of AHS/STAY will be released immediately representing the 85% mentioned above. The balance of 1,875 shares will be held in escrow by the company to be released on the following schedule:
625 shares to be released on approximately 8/15/99 (120 days)
625 shares to be released on approximately 1/25/00 (280 days)
625 shares to be released on approximately 4/15/00 (360 days)
The above information is what I have obtained from ETrade and through my understanding of the actual Merger Agreement. I post this information in an effort to make the thread aware of the possible holdback. While the holdback provision was clearly stated in the Merger Agreement, I don't know how many people obtained the full text of that agreement and/or actually read the full agreement.
I cannot speak on behalf of the company, but I have heard NOTHING which might indicate there would be any reason for the share conversion to be adjusted. Accordingly, I personally assume that the holdback shares will be released in accordance to the schedule laid out in that agreement. Furthermore, I assume that such temporary holdback provisions are common place in this type of merger.
Also please take special note of the fact that the above holdback provision of the merger agreement applies ONLY to those shares converted from AVAL --- it does NOT apply to any shares which may have been acquired directly from AHS/STAY in a private placement offering.
Hopefully, I have not confused anyone with this matter. I'm sure there are more than enough reliable sources on this thread to clear up any further questions anyone may have regarding the conversion and the temporary holdback provisions.
Offie |
