Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Oxford Health Plan (OXHP) -- Ignore unavailable to you. Want to Upgrade?

To: Thomas Haegin who wrote (431)	12/9/1997 8:21:00 PM
From: Andreas	Respond to of 2068

Thomas, White knight stepping in? Let me respond with an example I experienced about two years ago. I represented a forging company a few years ago that was not the typical hammer forge. In a nutshell they had a niche business - upset forging. However, their customer base consisted of three companies (large ones in the 2nd tier automotive). For reasons too lengthy and irrelevant here, the single largest customer of my client began plans to look for an alternative source. The new source ultimately had to move up the learning curve - obtain capacity, skill, knowledge, etc. causing my client tremendous cash flow problems as volume was shifted away from my client to the new source. My client looked for a buyer or white knight including most obviously the new source for my client's largest customer. New source analyzed it this way: alternative (i) buy going concern from competitor (my client) or (ii) wait for competitor (my client) to file bankruptcy and buy upset forging equipment, blue prints, know-how, and other proprietary knowledge through bankruptcy court. Alternative (i) was preferable if cost was only slightly above hammer value of assets of my client in bankruptcy sale. In conclusion, they waited for bankruptcy and bought my client's assets at bankruptcy auction. I suspect same analysis might be employed here, except here customer accounts have little value. Why? In bankruptcy, customer accounts will willing flee to competition. No need even for auction. Customer accounts can be had for free.