Now that's a news release LOL
When will the selling of 1E shares into the market stop? It may never stop.
ROOOOOOOOOOOOOOOOOOOOOOOOOOOTFLMAO!!!!
(COMTEX) B: TS&B Holdings Inc. CEO Issues Open Letter to Shareholders
B: TS&B Holdings Inc. CEO Issues Open Letter to Shareholders
ORLANDO, Fla., Mar 08, 2005 (BUSINESS WIRE) -- TS&B Holdings, Inc. ("Company"
or "TS&B") (OTCBB:TSBI), CEO James Jenkins issued the following open letter to
shareholders and the investment community explaining the Company's recent drop
in share price.
There appears to be a misconception in the marketplace by the investing public
regarding Business Developments Companies, how they raise capital for
investments and how the process affects share price.
Business Development Company Facts
In 1980, Congress enacted the SBIIA, which, among other things, amended the
Investment Company Act to establish BDC's as a new type of closed-end investment
company. Importantly, Congress emphasized that the primary purpose of the
amendments to the Investment Company Act (the "BDC Amendments") was to make
capital more readily available to small developing and financially troubled
businesses. Currently the SEC has a Proposed Rule to expand what is considered
an eligible portfolio company. To accomplish this purpose, the BDC Amendments
relieved BDC's from the application of some of the restrictions applicable to
registered closed-end investment companies under the Investment Company Act,
while also retaining important investor protections. BDCs are provided greater
flexibility under the Investment Company Act than are other investment companies
in dealing with their portfolio companies, issuing securities, and compensating
their managers. See Sections 54-65 of the Investment Act.
BDC Funding and Capitalization
The most common way in which a BDC raises capital to fund acquisitions,
expansion and growth is through a 1E filing. The filing is a registration of
free trading common stock to be sold to private investors usually at a discount
to market. Investors in turn may hold or liquidate the shares on the open
market. A misconception by many retail investors (shareholders) is that the
company actually sells or trades the shares. The company or the management
itself does not trade the stock in the open market. The common shares owned by
management are restricted under Rule 144, therefore the value of common shares
of insiders either appreciate or decrease in value with the public sector.
As an example, if A BDC were trading at $.10 and "maintained" its shares price
through retail support and were to raise $5 Million under the BDC exemption it
would sell somewhere around 60M shares, best case, to investors who may or may
not hold the stock in their portfolio. If there was no retail support of the
stock it could potentially drop in price to $.0001 before the company was in a
position to raise capital sufficient to maintain its portfolio.
Market Cap vs Net Asset Value and share price
Market Cap is determined by the number of issue shares multiplied by the share
price. Net Asset Value (NAV) is determined by the net of the Total Assets less
Liabilities. For a BDC to maintain its Market Cap, which should at the minimum
mirror its NAV, it requires the support of retail investors and institutional
buying. When a company has no retail support in the market the share price will
most likely see downward pressure resulting in a drop in price, which drop could
be dramatic. As stated in the Company's latest 10Q, the NAV had increased to $4
Million, yet the market cap of the company remained at approximately $359,000.
This is, less than ten percent of the NAV.
The stock price is drastically undervalued at these levels. There is little or
no retail investor support for the stock. Rather the market makers have boxed
the stock and are trading it on a daily basis, driving the stock price downward.
The only way to break out of the box and see an upward trend in the share price
is through retail and institutional support.
Capitalization through institutional investors and retail support, as well as
growth of portfolio companies to breakeven and profitability, are essential
ingredients for a BDC to be successful.
Valuation of Assets
TS&B is a BDC that is implementing its business plan, has acquired and is
growing its portfolio and is fully compliant with all SEC filing requirements.
The portfolio of the Company is valued by an "Independent third party firm."
Shareholder Questions and Comments
Why doesn't the company buy back shares? The Company, due to its drastically
undervalued stock price and its need to fund its portfolio companies must
continue to sell shares. The number of shares sold into the market is dependent
on the share price, the higher the share price the less stock is sold, and
conversely the lower the price a greater amount of shares must be sold into the
market.
When will the selling of 1E shares into the market stop? It may never stop.
Although it is the goal of the Company to get its portfolio company's profitable
and paying management and consulting fees to the parent in a manner sufficient
to cover all the overhead and operating expenses there can be no assurances this
will happen. What is of most importance is that the Company's share price trades
at a Market Cap that is at minimum the NAV, which requires retail and
Institutional support in the market thus less shares will need to be sold to
investors.
"Insiders are crooks and are selling shares!!" This statement could not be
further from the truth. A shareholder that understands the workings of a BDC and
the insider rule would be astute enough to realize that insiders can only sell
pursuant to Rule 144. Also, insiders can not sell stock and lend it back to the
company. Insiders, including management, that have holdings in the company are
subject to the same swings in share price as the investing public.
In summary, the Company is taking the necessary steps to implement its business
plan and create shareholder value. The company has acquired and built a small
portfolio with a NAV of $4 Million and is currently trading at .0009, a Market
Cap of approximately $459,000 or 11% of the NAV, a fraction of its value.
The stock of TS&B Holdings is a tremendous opportunity for Investors who
understand a BDC and the mechanics of how they operate.
Conclusion
Capitalization through institutional investors and retail support, as well as
growth of portfolio companies to breakeven and profitability, are essential
ingredients for a BDC to be successful.
SAFE HARBOR
The statements made in this release constitute "forward-looking" statements,
usually containing the words "believe," "estimate," "project," "expect," or
similar expressions. These statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements inherently involve risks and uncertainties that could
cause actual results to differ materially from the forward-looking statements.
Factors that would cause or contribute to such differences include, but are not
limited to, changing economic conditions, interest rates trends, continued
acceptance of the Company's products in the marketplace, competitive factors and
other risks detailed in the Company's periodic report Filings with the
Securities and Exchange Commission. By making these forward-looking statements,
the Company undertakes no obligation to update these statements for revisions or
changes after the date of this release.
SOURCE: TS&B Holdings, Inc.
CONTACT: KMA Capital Partners, Ltd., Orlando
Warren White, 407-370-4300
Fax: 407-226-3977
info@KMAcapital.com
kmacapital.com
Copyright Business Wire 2005
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KEYWORD: United States
North America
Florida
INDUSTRY KEYWORD: Professional Services
Banking
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