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Technology Stocks : ALU - Allou Health & Beauty: Another Web Play -- Ignore unavailable to you. Want to Upgrade?

To: Bo Le who wrote (234)	2/19/1999 11:00:00 PM
From: Pat	Read Replies (1) \| Respond to of 418

Haven't heard anything definitive about private placement. just negative speculation here. I am much more sure that this price will climb next week.

To: Bo Le who wrote (234)	2/21/1999 8:20:00 PM
From: Questerr	Read Replies (1) \| Respond to of 418

Bo and others - I don't think the Jacobs or management are trying to "steal" FC from other ALU shareholders, rather trying to appease their broad shareholder base (ie. value investors). When the Jacobs made the $3 million loan, it was prior to signing agreements with major portals, although AOL had already been signed up. ALU mgt. asked for an independent appraisal from (I think) an audit firm to get a sense of what FC and CC was worth before approaching venture capitalists. At the time, prior to the portal agreements, it was believed FC/CC was worth about $18 million. When ALU mgt. approached various venture capital firms for a loan to sustain FC/CC, it became clear the VC's were willing to loan the $ in exchange for a significant % of FC/CC. The Jacobs felt this business was worth significantly more so they offered to make the loan themselves. So I do think it reasonable they get the equivalent of 17% in stock for converting. Today it is believed, with the additional portal agreements and increased traffic, FC/CC is worth closer to $45 million - as much as the market capitalization of Allou. Allou mgt. is not allowed to use current bank credit lines backed with health and beauty aids product/inventory and receivables for FC/CC whose sales are nearly non-existent (annualized so far at $6 million). Mgt. has had discussions with different size Wall Street firms. The large ones aren't interested in doing deals less than $500 million. You have to go down the food chain to find a firm willing to bring a $45 million subsidiary public. Mgt. seems to feel if they take the private placement route they give up some of the company now for much needed capital and the ability to grow it fast to a $400 million company that ALU shareholders will get 20% later(Jacob's loan conversion 13% will dilute to 9%). Their reasoning is 20% of $400 million which equals $80 million, is more than they could raise today for FC to Allou shareholders. Although I agree with some of managements' logic, I disagree on whole with their reasoning. They should spin FC/CC off now to allow those shareholders who would like to capitalize on their investment in FC/CC to do so, and provide those value investors, who so choose, to sell their shares. Investment bankers may put a price tag of $45 million on FC, however, I think traditional investment bankers do not know how to value internet companies properly, reflected by incredible price increases in recent internet company IPO's (ie. EBAY climbing from its $18 IPO price, GeoCities, etc) FC might go public at $45 million but would likely climb much higher shortly thereafter. I don't know if management completely understands the upside potential we own in FC/CC, which could easily eclipse the current Allou value or business paradigm over time. They need to extricate the value of FC without giving it away to the Venture Capitalists who will act like they are not interested, while truly salivating at the prospect. We own a growth opportunity here, which could accelerate faster than anything Allou management has been accustomed to managing in the past. Let's keep FC/CC for shareholders; and not further enrich Venture Capitalists. Let management know how you feel about this crucial issue - they are very approachable!!!!