| An SI Board Since September 2000 |
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CVTK |
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This is a company that for some reason put itself in strangulation. It has a breakeven point at about $43.8 million. It has not been willing to cut cost to make money each year. Instead it prefers to live under the will of their bank by running a deficit most of the years, but not by much. Cash flow might be what the management is only concerned about.
It has some hidden asset whish has been depreciated for many years. It's equity is now negative on their books. Yet, it has a merger agreement which it has not been able to close. If closed, the shell will have about $3 million in cash, back to a shell worth about $0.5/share that the market value is today.
All this sounded impossible. As no one should invest in it. But we owned Fortune systems which changed to Tigera which shell was taken over by CVTK, Connectivity Technologies in Leominster, Mass.
I have to tell you that this kind of company very often are controlled by their bank. If I wanted to assume the debt, I can own this company today by talking to the banker in charge. The bank is stuck with them due to the loan; as well as enjoying the deposit this company brings to the bank. Company of this type do not go into chapter 11 protection, because of their hidden assets.
So, I am going to try to do some business consulting to the management at arm's length here. Let's see what we can do with this company.
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