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http://finance.yahoo.com/news/bieber-backs-debit-card-teenagers-021124382.html
(COMTEX) B: SOUTHERN STATES POWER CO. INC - Execution of Memorandum of U
B: SOUTHERN STATES POWER CO. INC - Execution of Memorandum of Understanding To
Build New Biodiesel - Facility and Announces Restructuring of Joint Venture
New York, New York, Mar 18, 2002 (Market News Publishing via COMTEX) --
Southern States Power Co. Inc., a provider of alternative fuels and a member of
the National Biodiesel Board, announced that it has entered into a Memorandum of
Understanding with Lurgi, PSI Inc. (Web site: www.lurgipsi.com) outlining the
companies' intention to develop a state-of-the-art 30 million gallon per year
biodiesel facility in Riverside, Calif.
The facility will be designed to produce fuel that meets the highest standards
in the biodiesel industry and would be the largest biodiesel facility in the
United States.
Southern States Power Co. also announced that it has entered into an agreement
with Imperial Western Products for the restructuring of the companies' joint
venture regarding the Coachella Valley Production Facility. Under the terms of
the agreement, the parties will share an equal distribution of the revenues from
fuel produced at the Coachella plant, which will remain unchanged for a minimum
of 12 months, with the possibility of an extension with the approval by both
parties.
Southern States Power Co. will retain a 50% profit split in addition to a $0.10
per gallon royalty for all fuel produced and sold under the United States
Department of Agriculture subsidy program that has been assigned to the
facility.
The agreement further provides that Southern States Power Co. will be reimbursed
for all costs related to the construction of the Coachella facility in
consideration of the transfer of all Southern States Power Co.'s ownership in
the facility and equipment.
The U.S.D.A. subsidy previously granted to Southern States Power Co. for
production of biodiesel at the Coachella facility is now being assigned to
Imperial Western Products, allowing Southern States Power Co. to fulfill its
$7.5 million subsidy through the Riverside facility, as well as other planned
facilities in California, Arizona and Nevada.
Harrison A. McCoy III, chairman and CEO of Southern States Power Co., commented:
"Southern States Power Company is excited about its expanding relationship with
Lurgi, PSI, a publicly traded company and a leader in the field of engineering
and biofuels plant construction. Our joint goal is to develop gold standard
biodiesel production that meets both the American ASTM D6751-02 and the German
DIN 51606 specifications, the highest standards in the industry, at future
facilities."
McCoy added: "It has been a pleasure working with Imperial Western Products in
developing biodiesel production capability at Coachella. Both companies have
benefited from our association thus far, and we look forward to a long and
prosperous ongoing relationship under our restructured agreement."
About Southern States Power Co.
Southern States Power Co. is a fully reporting publicly traded company, whose
core business is to develop, produce and distribute alternative fuels,
particularly its OxEG Biodiesel. Southern States Power Co. has two synergistic
divisions: one for the production and sale of biodiesel and the other devoted to
the generation of power using alternative fuels.
More information can be found at the company's Web site: www.sspowerco.net or
call 909/476-3575, or e-mail Investor Relations at: info@sspowerco.net.
Safe Harbor Statement
Forward-looking statements and comments in this news release are made pursuant
to safe harbor provisions of the Private Securities Litigation Reform Act of
1995. All statements, other than statements of fact, included in this release,
including, without limitation, statements regarding potential future plans and
objectives of Southern States Power Co., are forward-looking statements. Such
statements are necessarily subject to risks and uncertainties, some of which are
significant in scope and nature beyond the Southern States Power Co.'s control.
There can be no assurance that such statements will prove to be accurate and
actual results and future events could differ materially from those anticipated
in such statements. As a result, actual results may differ materially depending
on many factors, including those described above. Southern States Power Co.
cautions that historical results are not necessarily indicative of the company's
future performance.
CONTACT: TEL: 909/476-3575 Southern States Power Co. Inc.
FAX: 909/476-3576 Investor Relations
EMAIL: info@sspowerco.net
MarketbyFax(tm) - To get the NEWS as it happens, call (604) 689-3041.
(C) 2002 Market News Publishing Inc.
-0-
KEYWORD: New York, New York
*** end of story ***
(BSNS WIRE) Southern States Power Company Inc. Announces $5 Million U.S. Fi
Southern States Power Company Inc. Announces $5 Million U.S. Financing
Agreement
Business Editors
ONTARIO, Calif.--(BUSINESS WIRE)--March 6, 2002--Southern States
Power Co. Inc. (OTCBB:SSPC), a provider of alternative fuels and a
member of the National Biodiesel Board, today announced that the
company has entered into an Equity Line of Credit with Cornell Capital
Partners, L.P.
The proceeds generated will be used to increase production and
distribution capability, enlarge Southern States' client base, and
expand brand recognition for the company's OxEG Biodiesel. Pursuant to
the Equity Line of Credit, the company may, at its discretion,
periodically sell to the Cornell Capital Partners shares of common
stock for a total purchase price of $5 million (U.S.).
Harrison A. McCoy III, Chairman and CEO of Southern States Power
Co., commented: "This equity line of credit provides the company with
the foundation and financial backing in order to achieve our stated
goal of becoming a leading producer and distributor of premium
biodiesel fuel. The company has already put into motion several steps
of this strategy thanks, in part, to the knowledge that we have the
capital backing integral to our success."
Southern States recently announced approval of its application for
up to $7.5 million in subsidies for the production of biodiesel from
soy oil. The company has announced plans for additional production
facilities in California, Arizona and Nevada, in addition to the
development of a more effective distribution system for its OxEG
Biodiesel.
About Southern States Power Co.
Southern States Power Co. is a fully reporting publicly traded
company, whose core business is to develop, produce and distribute
alternative fuels, particularly its OxEG Biodiesel.
Southern States Power Co. has two synergistic divisions: one for
the production and sale of biodiesel and the other devoted to the
generation of power using alternative fuels. Tightening clean air
standards and growing fossil fuel costs are forcing municipal and
private commercial fleets to look toward alternative fuel products.
Major biodiesel initiatives have been passed at the federal and state
levels across the United States.
More information can be found at the company's Web site:
www.sspowerco.net or call 909/476-3575, or e-mail Investor Relations
at: info@sspowerco.net.
Safe Harbor Statement
The foregoing news release may include numerous forward-looking
statements concerning the company's business and future prospects and
other similar statements that do not concern matters of historical
fact. The Federal securities laws provide a limited safe harbor for
certain forward-looking statements. Forward-looking statements in this
news release relating to product development, business prospects, and
development of a commercial market for technological advances are
based on the company's current expectations. The company's current
expectations are subject to all of the uncertainties and risks
customarily associated with new business ventures including, but not
limited to, market conditions, successful product development and
acceptance, competition and overall economic conditions, as well as
the risk of adverse regulatory actions. The company's actual results
may differ materially from current expectations. Readers are cautioned
not to put undue reliance on forward-looking statements. The company
disclaims any intent or obligation to update publicly these
forward-looking statements, whether as a result of new information,
future events or for any other reason.
--30--KT/np* JE/np
CONTACT: Southern States Power Co.
Investor Relations, 909/476-3575
Fax: 909/476-3576
E-mail: info@sspowerco.net
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: ENERGY ENVIRONMENT OIL/GAS
SOURCE: Southern States Power Co.
Today's News On The Net - Business Wire's full file on the Internet
with Hyperlinks to your home page.
URL: http://www.businesswire.com
*** end of story ***
(BSNS WIRE) Southern States Power Co. Receives Approval For Up To $7.5 Mill
Southern States Power Co. Receives Approval For Up To $7.5 Million Feedstock
Subsidy Under U.S. Department of Agriculture Bio-Energy Program
Business Editors
ONTARIO, Calif.--(BUSINESS WIRE)--Feb. 12, 2002--Southern States
Power Co. Inc. (OTCBB:SSPC) today announced that the company has
received notification that its application has been approved for the
2002 United States Department of Agriculture Bio-Energy Subsidy
Program (CCC-850).
As a result of the growing national interest of developing
renewable energy sources, the U.S. government initiated this program
to support renewable fuel production. Under the subsidy, the company
will be reimbursed quarterly for purchases of bio-based feedstock used
in the production of biodiesel.
Harrison A. McCoy III, CEO of Southern States Power Co.,
commented, "Approval of the company's application represents an
important step in development of Southern States as a biodiesel
producer and is another milestone in its expanding corporate strategy,
putting Southern States in an ideal position to capture a substantial
portion of the regional market.
"This program also assists U.S. efforts to establish homeland
energy security and shift payments from foreign oil interests to
America's farmers, assisting in the overall health of domestic
agriculture," McCoy added.
All biodiesel produced from soy oil by Southern States Power Co.
for fiscal year 2002, up to a maximum amount of $7.5 million, will be
eligible under the Bio-Energy subsidy program. The subsidy includes
biodiesel produced from the Coachella joint venture plant, as well as
any soy-based biodiesel produced at planned facilities in Reno, Nev.,
Phoenix, and Sacramento, Calif.
About Southern States Power Co.
Southern States Power Co. is a fully reporting publicly traded
company, whose core business is to develop, produce and distribute
alternative fuels, particularly its OxEG Biodiesel. Southern States
Power Co. has two synergistic divisions: one for the production and
sale of biodiesel and the other devoted to the generation of power
using alternative fuels.
Tightening clean air standards and growing fossil fuel costs are
forcing municipal and private commercial fleets to look toward
alternative fuel products. Major biodiesel initiatives have been
passed at the federal and state levels across the United States.
More information can be found at the company's Web site:
www.sspowerco.net or call 909/476-3575, or e-mail Investor Relations
at: info@sspowerco.net.
Safe Harbor Statement
The foregoing news release may include numerous forward-looking
statements concerning the company's business and future prospects and
other similar statements that do not concern matters of historical
fact. The federal securities laws provide a limited safe harbor for
certain forward-looking statements. Forward-looking statements in this
press release relating to product development, business prospects, and
development of a commercial market for technological advances are
based on the company's current expectations. The company's current
expectations are subject to all of the uncertainties and risks
customarily associated with new business ventures including, but not
limited to, market conditions, successful product development and
acceptance, competition and overall economic conditions, as well as
the risk of adverse regulatory actions. The company's actual results
may differ materially from current expectations. Readers are cautioned
not to put undue reliance on forward-looking statements. The company
disclaims any intent or obligation to update publicly these
forward-looking statements, whether as a result of new information,
future events or for any other reason.
--30--EZ/np* JP/np
CONTACT: Southern States Power Co., Ontario
Steve Peacock, 909/476-3575
Fax: 909/476-3576
E-mail: info@sspowerco.net
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: ENERGY
SOURCE: Southern States Power Co.
Today's News On The Net - Business Wire's full file on the Internet
with Hyperlinks to your home page.
URL: http://www.businesswire.com
*** end of story ***
when is the bustout???????been holding for quite awhile--getting restless!!!!!we need news!!
More info on radio interview.
Got this email response from Ed Taxin, who does the The Financial Hour with Ed Taxin on WBIS and numerous other stations throughout the country.
"the shows are broadcast live on the web and from time-to-time copies
are made and run on our website(Taxin.com). Todays show was not recorded. We
will have Larry Taggart on again next week.If you e-mail us over the weekend
we will be able to give you a date and time."
Additionally, I spoke with the station and they said they would provide Ed with a copy of today's interview to post on his website. Guess Ed thought they didn't record it, they did. One of my best friends is GM at CNN radio and WBIS is an affiliate.
I'll let everyone know when it is there and the schedule for next weeks interview. 2 interviews w/ CEO in 2 weeks, lots going on with our SSPC.
somelife
only talked to Mark a couple other times and for the company it is only what I can do DD on.....
I don't have a great deal invested in it only 7k its just play money and if the company can do what I think they can do well you get my draft....I never invest more then I can afford to lose...I am not a full time invester,,I do have a day job...
JNelson
How well do you know Mark or this company
I think this coming week we will all know what is going on.....
I talked to Mark today and he said the opening is going to still take place Monday,,,he said that they were finishing up some painting and double checking lines again...Should be an interesting week ahead.....He did not tell me there was a lot of info coming out but he did say watch for PR's and he also said there was going to be a pr on the opening of the plant...All I haqve at this time....
Quite frankly, I am trying to understand what is going on with this company
just jumping around tonight,,how you doing????
and one more about floorless convertibles:
http://www.herring.com/index.asp?layout=story&channel=20000002&doc_id=1310018931
Death by finance
By Paul Elias
Red Herring
April 11, 2001
This article is from the April 1, 2001, issue of Red Herring magazine.
L. David Sikes was desperate. The CEO of Ramtron International (Nasdaq:
RMTR) watched helplessly as the publicly traded chip maker lost $1 million a
month during the height of the Asian financial crisis of 1998. Ramtron
needed $17 million to stay in business, but couldn't turn to the traditional
capital markets -- not with its balance sheet and its dependence on the
Asian market. With nowhere else to turn, Mr. Sikes contacted a consortium of
12 individual investors and came up with the $17 million at terms that would
make a credit card company green with envy. "It was," Mr. Sikes concedes, "a
roll of the dice."
What Mr. Sikes did was take a "toxic convert," a financing measure of last
resort that is becoming increasingly popular in the wake of the Nasdaq crash
on April 14, 2000 -- and is coming under increasing scrutiny. In exchange
for the $17 million, Mr. Sikes was required to turn over about $19 million's
worth of Ramtron common stock. The catch: the investors were entitled to the
$19 million in stock, regardless of the price per share.
And it was likely that Ramtron stock would drop enough so that the investors
would eventually take control of the company on the basis of their $17
million infusion. In fact, when a company takes a deal like this, the odds
are overwhelming that its stock will drop. Within six months, Ramtron's
share price dropped from $5 to $0.25. Of the 220 such toxic convert deals
that took place in 2000, only five companies wound up in better shape --
most of them tanked.
It happened to eToys. It happened to MicroStrategy (Nasdaq: MSTR). It
happened to Quokka Sports (Nasdaq: QKKA). And it happened to hundreds of
other startups on the verge of extinction. Still, hundreds more clamor for a
similar deal. And for every company in need there is an organization willing
to lend a hand -- for a stiff price: Promethean Asset Management, the
Citadel Investment Group, Marshall Capital Management, and Angelo, Gordon &
Company. There's a reason they aren't household names. "They like to stay
under the radar," says Steve Bruce, an attorney who represents the Citadel
Investment Group, explaining why his clients and their competitors would be
unwilling to discuss their business.
THE QUICK AND THE DEAD
Toxic converts are a form of private investment in public equity (PIPE) and
are known in the industry as the grimmest of reapers. Companies accept the
financing because it is fast -- typical deals close within a month -- and
the sums are generally below the $30 million minimum for secondary
offerings. A last-ditch infusion of capital tied to stock price is an
entrepreneur's way of gambling on a long shot -- that the struggling company
can quickly turn around. Far more frequently, however, it is merely an
invitation to the short-sellers -- often the PIPE investors themselves --
and throws the company's stock into an irreversible death spiral.
Meanwhile, the investors get fat at the expense of long-term individual and
institutional investors. Promethean Asset Management founder and president
James O'Brien boasted in the pages of a conference agenda that his $140
million fund has returned 126 percent since 1996, when the financing
mechanism was first unleashed. Six years ago, 36 death-spiral deals worth a
combined $264 million were consummated, according to private equity tracker
DirectPlacement.com. In 2000, death-spiral deals were taken by 220 companies
and accounted for $2 billion of the $18 billion overall PIPE industry. This
popularity comes despite the fact that the death-spiral investors, motivated
by a seller's market, stack the odds higher and higher with increasingly
onerous contract demands.
As the technique grows in popularity, so does the controversy surrounding
the profiteering. And now some companies and long-term investors are
fighting back. The State of Wisconsin Investment Board, which manages a $60
million portfolio, has threatened to sue any of its portfolio companies that
get involved with PIPEs. Several other companies have sued or are suing
their PIPE investors. The growing ranks of dissatisfied companies include
Log On America (Nasdaq: LOAX), Ariad Pharmaceuticals (Nasdaq: ARIA), and
Ramtron, where Mr. Sikes struggled to extricate his company from the deadly
deal's tight grip. "That was the most miserable year of my life," he says.
Ramtron, based in Colorado Springs, Colorado, lives on today only because
the deal went so horribly sour. The investors demanded more shares than the
company had issued. Using that as leverage, Mr. Sikes engineered a
five-for-one reverse stock split and paid the investors 50 cents on the
dollar to settle several lawsuits. But Mr. Sikes, who retired last year, was
one of the few lucky ones.
DEVIL'S FOOD
When Mr. Sikes signed his deal with the devil, he was able to explicitly ban
his investors from short-selling the company's stock. It did little good.
The company was hit hard by unidentified short-sellers who helped send the
company's stock into a six-month nosedive. "Things can happen offshore that
you can't prevent," he says.
Today's PIPE deals don't prohibit short-selling by the investors. In fact,
companies sign contracts that explicitly allow the investors to sell stocks
short. "The companies resist the clause in the first four or five drafts of
the contract," says securities lawyer Robert Friese. "But by the sixth
draft, it's in there."
When it comes time to recoup their investments, death-spiral dealmakers
garner enough stock in the companies to cover large short positions and have
enough left over to take control.
Another benefit of short-selling for toxic-convert investors: as the stock
drops in price, not only do they get a larger share of the company, but the
company's valuation makes it an attractive takeover candidate -- enabling
the investors to make money on both ends.
Judson Schmid, chief financial officer of health care content provider
ProxyMed (Nasdaq: PILL), points out that for dot-coms that went public too
soon, there often is little choice -- take the tainted money or turn off the
lights. "When you get desperate, you're willing to overlook things," he
says.
Ramtron's 1998 agreement called for it to repay the death-spiral investors
with common stock discounted 7 percent from the prevailing market rate. Now,
companies are consenting to repay the investors with stock discounts ranging
from 10 percent all the way up to 30 percent.
In December 1999, ProxyMed raised $15 million in a death-spiral deal with
several investors. Among other concessions, ProxyMed agreed to voluntarily
delist from the Nasdaq in the event that the investors were owed more than
20 percent of the company and its long-term shareholders refused to allocate
additional stock. At the time ProxyMed signed the deal, its stock traded at
$10 a share.
When the investors came calling for repayment last year, the company's stock
had collapsed to below $3 a share. By May, the company owed the investors
close to 40 percent of all its common stock. Rather than delist, ProxyMed's
shareholders agreed to a radical dilution of the company's stock. They
doubled the company's stock allocation from 50 million to 100 million, in
essence devaluing their investments by half to pay off the death-spiral
deal. The company also needed additional funding in 2000, taking a $24.3
million investment that further diluted the company's ownership.
ProxyMed now trades at around $1 a share.
PROMETHEAN UNBOUND
These deals are also referred to as "corporate loan-sharking," "payday
advances," or "pawnshops for dot-coms." Mr. O'Brien, an industry pioneer,
established Promethean in 1994 after serving as managing director of
Fletcher Asset Management in New York. Last year, Promethean invested nearly
$108 million in 11 companies. The stock of every one of those companies lost
value after the investment. According to PlacementTracker.com, the stocks of
companies that Promethean has invested in since 1995 have dropped an average
of 36.5 percent just six months after closing the deals and 17.3 percent
after a year.
Last year, Promethean chipped in $25 million of the $100 million in
death-spiral convertibles invested in eToys and $20 million of the $125
million invested in MicroStrategy. EToys stock plummeted from around $5 at
the time of the deal to almost zero this year and at press time was facing
bankruptcy and Nasdaq delisting. MicroStrategy stock traded at $38 when its
deal was announced in June, almost four times what it was trading by
February. Promethean's partners in those two deals were Citadel in Chicago
and Angelo, Gordon in New York.
Citadel is a $4.5 billion hedge fund that invested $141 million in seven
companies last year, including $60 million in MicroStrategy and $30 million
in eToys. Citadel's portfolio companies decline an average of 21 percent a
year after closing its death-spiral deals, according to
PlacementTracker.com.
Angelo, Gordon's portfolio companies fared somewhat better, dropping a mere
6 percent a year after closing its deals. But Angelo, Gordon doesn't do as
many death-spiral deals as Citadel and Promethean. Last year, Angelo, Gordon
closed seven death-spiral deals for a combined $125.7 million, of which $90
million was divided equally between investments in eToys and MicroStrategy.
Clearly, companies signing up for such financing are generally poor
performers and doomed for failure anyway -- with or without additional cash.
The death-spiral deals themselves don't necessarily kill an already dying
company. But they definitely hasten death.
The investors are assured automatic profits because they demand repayment in
common stock, sold to them below the prevailing market price. They face
little downside in shorting the stock, especially since the companies are
usually in financial trouble and their stocks were destined to tumble
anyway.
TOXIC AVENGERS
As more death-spiral deals go bad, some long-term investors and even the
companies themselves are fighting back.
In banning its portfolio companies from taking toxic converts, the Wisconsin
Board of Investment warned: "The investors have gone through great lengths
to appear thorough and genuine in their interest in the companies. However,
they may actually be assessing the odds of failure. Adding a toxic security
to the financial structure increases the odds."
If a company in the portfolio succumbs to temptation, "We will sell the
company or seek some kind of [legal] action," says board analyst Mark
Traster. The investment board also threatened to pull its business from a
large investment bank that is trying to get into the death-spiral business.
With the growth of this financing technique -- and the drying up of
traditional investment banking services -- prestigious investment banks are
entering the market. For example, Credit Suisse First Boston now controls
Marshall Capital Management, which specializes in death-spiral convertibles.
Meanwhile, several companies have sued their death-spiral investors,
alleging fraud and market manipulation. Ariad sued Promethean in 1999, a
year after Promethean invested $5 million in the company. The suit accused
Promethean of shorting 2.5 million shares -- 10 percent of the company --
soon after closing the deal. This massive short-selling helped send Ariad's
stock from $3 a share to just $0.59 in a few weeks, say executives at Ariad.
The companies settled last year. Ariad agreed to issue just under 1.1
million new common shares so Promethean could "cover [its] total outstanding
short position," according to a document filed with the U.S. Securities and
Exchange Commission. The company also agreed to pay Promethean $6.9 million.
Citing a nondisclosure agreement, lawyers for both sides declined to discuss
the case. But Log On America, a small Rhode Island ISP, is using the Ariad
settlement as a centerpiece for its own suit against Promethean, Citadel,
and CSFB's Marshall Capital.
Log On America accuses the investors of stock fraud. The investors, Log On
America alleges in its suit, funded the company simply "to launch an
unlawful scheme to short-sell its stock in sufficient volume to drive down
its price, knowing that they would be in a position to cover the short sales
by converting their preferred stock at depressed market prices." The
investors' alleged short-selling, according to the lawsuit, allowed them to
reap millions of dollars in profits from short-selling while "simultaneously
allowing them to reap tens of millions of dollars in profit and seize
control of the company" as the ultimate result of the PIPE deal. Since Log
On America entered into the deal in January 2000, its stock price has
dropped from $17 to $2.50, and the company has lost about $120 million in
market capitalization.
None of the investors returned telephone calls. But in court documents, they
deny all of the accusations. In fact, every investor except Marshall Capital
denies that they sold short a single share of Log On America stock. Besides,
they say in court papers, even if they did sell short, they did nothing
illegal.
Indeed, the contract explicitly allows the investors to sell short. Their
bottom line: Log On America is trying to get out of "having to live up to
its obligations under the agreement."
LIFE AFTER DEATH
What the lawsuit doesn't fully explain is why Log On America entered into
the deal in the first place. That's saved for a separate suit against CSFB,
which served as Log On America's financial adviser and helped negotiate the
death-spiral deal. The suit alleges, and Log On America CEO David Paolo
asserts in a separate interview, that CSFB led them astray with bad advice
and that the advice was given because CSFB was concerned primarily with
sending business to its subsidiary, Marshall Capital.
Mr. Paolo says his company had $20 million in cash on hand and a burn rate
of $4 million a year when CSFB persuaded Log On America to take the deal.
"We should never have done that deal," Mr. Paolo says now. "We didn't need
the money." At press time, the investors were attempting to have the suit
thrown out.
Meanwhile, most of the companies that took these deals weren't like Log On
America. They were young companies teetering on the brink of extinction.
Death-spiral investors were the only places these companies could raise more
capital. Some decided against taking a death-spiral deal and chose to shut
off their lights instead. An investor, who asked not to be identified, asked
rhetorically, "Who was better off, Pets.com or eToys? EToys lasted longer
and gave it a shot. Pets.com didn't, and shareholders in both companies are
now in the same position. Which is worse?"
Julie Wainwright, CEO of the now-departed Pets.com, did, in fact, turn down
offers from the toxic-convert crowd as the company sank into oblivion late
last year. She apparently didn't want Pets.com tossed into a vortex that
would end with toxic-convert investors walking away with the company's
carcass. Instead, Ms. Wainwright filed for bankruptcy under Chapter 7,
choosing to liquidate Pets.com and pay off the company's creditors and
long-term investors as best she could. Ms. Wainwright apparently reasoned
that the act of putting down Pets.com without taking a toxic convert was a
more dignified death.
But there's another benefit to avoiding the financial grim reaper. By not
selling out the interests of long-term investors to Johnny-come-latelies,
executives like Ms. Wainwright stand a chance of burning fewer bridges --
increasing their odds of staying in the game.
Write to paul.elias@redherring.com.
links to some sites that have some info on some of these sharks:
http://www.placementtracker.com
http://www.directplacement.com/
Disclaimer: Advertisements embedded in my posts at IHUB are the sole responsibility of IHUB. I do not endorse them in any way, have any input to their content, & recieve no compensation from them.
another good article about floorless debentures:
JUNK EQUITY DEALS CAN HARM STOCK
While a "floorless convertible" offering can help a struggling company, the floating conversion feature is potentially ruinous.
By Robert C. Friese and Jahan P. Raissi
as published in The National Law Journal, February 15, 1999
In the 1980s, troubled companies often turned to junk bonds as a source of last-resort financing. More recently, small, struggling public companies that cannot raise capital through traditional means have turned to a relatively new type of security, which, depending on one's point of view, has been called a "floorless convertible," "toxic convertible," "death spiral convertible" or simply "junk equity." Although these securities can be a boon to a struggling company, they can also be the final nail in its coffin if not structured properly.
Abuses of these securities are causing substantial losses to the investing public and great harm to many companies that rely on them for financing.
Although the possible permutations are many, floorless convertibles typically take the form of privately place preferred equity or debentures that are convertible to common stock after a fixed period of time. The conversion price is generally discounted 15% to 30% from the market price of the common stock at the time of conversion.
What distinguishes these securities is that the conversion ratio is tied to, and varies with, the market price of the underlying common stock --- hence the name "floorless" convertibles. The lower the market price of the common stock at conversion, the greater the number of common shares the company must issue to holders of the floorless convertibles.
Like many other seemingly good ideas that often don't work in practice, the concept of floorless convertibles is theoretically sound. Given honest, nonmanipulative market activity in the underlying common stock, when properly structured the capital raised in an offering of floorless convertibles can allow a struggling company to realize greater shareholder value.
Unfortunately, the history of these offerings has shown that the results are often ruinous for companies and their shareholders. This has become a serious problem since this type of security has grown to an annual billion-dollar-plus cottage industry for certain of its promoters.
The source of most of the recent problems with floorless convertibles has been the floating conversion feature. If the market price of an issuer's common stock declines, the floating conversion feature can result in an unexpectedly large number of common shares being issued at conversion.
The release of large quantities of common stock into the market can significantly depress the market price of the common stock and can necessitate an even greater issuance of common stock in subsequent conversions. This phenomenon can create a downward spiral in the market price of the common stock as greater numbers of shares are sold into the public market.
Moreover, the issuance of large blocks of new common stock severely dilutes existing shareholders. The floating conversion feature also provides the unscrupulous with an incentive to depress the market price of the company's common stock.
Even for legitimate investors, there is an incentive to try to lock in profit by selling the issuer's common stock short, covering with shares obtained in the conversion. Often, the cumulative effect of market manipulation, short-selling and the food of common stock onto the market has been to put a company and its stock into the "death spiral."
High-Tech Targets
Some companies in the high-technology sector recently have been using floorless convertibles. Shares of these companies often are thinly traded, making them especially susceptible to price drops when the converted shares reach the market or when they are faced with sustained short sales.
Though floorless convertibles can be used by seasoned companies in turnaround situations as well as by new companies, the common denominator in such offerings is the issuer's lack of a source of conventional financing. Without the ability to tap into traditional debt or equity funding, issuers resort to floorless convertible offerings and often have little bargaining strength to avoid or blunt some of their more dangerous features.
The appeal of these instruments to their purchasers is easy to understand. The floating conversion ration and discount to market provide protection against a drop in the price of the common stock and usually all by assure the holders a profit.
To try to lock in a profit, the holders of the floorless convertibles sometimes will sell the issuer's common stock short and, thereafter, will cover with the converted common stock.
Alternatively, a holder may simply convert in to common stock at a discount to market and sell the stock to public investors, often pursuant to a registration statement on Form S-3, at a guaranteed profit. An emerging body of largely professional investors actively solicits companies for this type of private placement.
The Threat of Manipulation
Floorless convertibles pose serious dangers for issuers, even when the securities are held by legitimate investors. In the wrong hands, floorless convertibles are a stock manipulator's dream. If the holder of a floorless convertible sells the common stock of the issuer short, the market price of the security is driven lower and, at conversion, it will provide the holder with more common shares. The holder can use the shares received in the conversion to cover its short position and still may have shares to sell in the open market.
Sales in the open market may further depress the market price and increase the number of common shares received in subsequent conversions. The further the market price of the common stock declines, or can be driven down, the greater the profit.
In some cases, the manipulation of the issuer's common stock is overt. Traders have observed large buy orders immediately countered with several sell orders at prices below the immediately preceding buy order.
"Marking the close" – in which sell orders are place at the close of the market to create a downtick and a bearish impression – is one technique that has been used. Another technique involves massive short sales in situations in which almost no shares are available for borrowing, suggesting manipulative "naked" short selling.
In some of the most extreme instances, share prices of companies issuing such convertibles have been driven down by more than 90% for brief periods. On the heels of these price collapses, companies are presented with notices of conversion.
As the market price of the issuer's stock collapses, existing shareholders are hit with the one-two punch of a downward spiraling stock price and large-scale dilution of their holdings. Issuing companies sometimes face the delisting of their shares, permanently damaged capital structures and an inability to raise additional financing.
This turn of events can occur even in the absence of overt market manipulation. This flows from the holder's ability to lock in a profit by selling the issuer's common stock short and covering the position with shares obtained in the conversion.
In addition, professional short-sellers have caught on to the fact that the price of shares of companies that resort to floorless convertible financing will usually fall, and they seek out such companies as short-selling opportunities. Holders of floorless convertibles and market makers or others willing to short the stock sometimes enter into stock-loan arrangements, allowing the prospective short-sellers to borrow the stock needed for short sales.
Theoretical Limit
The shorting of shares is not illegal, but when done with manipulative intent or by brokerage firms or individuals without the ability to deliver the underlying common shares, shorting can become illegal and manipulative. The theoretical limit on such manipulation should be the "borrowability" of the issuer's shares, which is often nonexistent in thinly traded stocks, even from brokerage firms with large "short boxes."
Yet the fact that there may be no shares available to borrow does not seem to have limited the sort of shorting activity that has driven down the shares of many companies relying on this financing vehicle. This raises obvious questions of manipulation and enforcement of what are primarily self-regulatory organization (SRO) rules limiting most naked short-selling.
Regulatory Agencies
Securities regulators are beginning to pay closer attention to these instruments. The concern of the National Association of Securities Dealers (NASD) has been reported in recent months. The responses under consideration by the NASD run from informational campaigns to rules limiting the dilution of existing shareholders.
On Jan. 21, the NASD issued an interpretive release explaining the application of existing NASD rules to an offering of floorless convertibles by Nasdaq-listed issuers. The NASD release identified six NASD rules and categories of rules that may be implicated in such an offering: the shareholder approval rules, the voting rights rules, the bid price requirement, the listing of additional shares rules, the change in control rules and the discretionary authority rules.
Perhaps the most significant of the interpretations concerns the shareholder approval rules. Under certain circumstances, these rules require shareholder approval before the issue of common stock, or securities convertible to common stock, equal to 20% or more of the common stock outstanding before the issuance.
The release explains that, in applying the shareholder-approval rules, the NASD staff will look to the maximum number of common shares that could potentially be issued to determine whether the 20% threshold has been met. Thus, regardless of what is likely or anticipated, if, theoretically, the floorless convertibles could be converted into an amount of common stock equal to or greater than 20% of the outstanding common stock at the time the convertibles are issued, shareholder approval will be required before the floorless convertibles can be issued.
Similarly, both the Division of Corporation Finance and the Division of Enforcement of the Securities and Exchange Commission have been watching the developments surrounding floorless convertibles. The Division of Enforcement is investigating a number of floorless convertible offerings and the subsequent conversions and activity in the underlying common stock, some of which involve potential manipulative activity by entities and individuals abroad.
Issuers' Concerns
From an issuer's point of view, the regulatory concerns connected with an offering of floorless convertibles center chiefly on the private placement of the convertibles, the registration and resale of the common stock after conversion and the disclosure obligations arising from the offerings.
For investors, increased regulatory scrutiny is raising concerns. Litigation by shareholders is also on the increase. Although this may seem to be a logical area for shareholder litigation against alleged stock manipulators, manipulation cases are hard to prove and, to date, have not brought the plaintiffs' securities bar into action in a meaningful way.
One theory included in some cases brought recently asserts liability for short-swing profits under § 16(b) of the Securities Exchange Act of 1934. A sometimes-overlooked consequence of the floating conversion feature is that, if the price of the common stock falls far enough and the number of shares received in a conversion balloons, the holder may unexpectedly become subject to the short-swing profit provisions of § 16 and the reporting requirement of § 13.
Several disputes have arisen between issuers and the holders of the convertible securities. Faced with the prospect of extreme dilution of existing shareholders or of making a substantial cash payment when such cash may be unavailable, some issuers have simply refused to convert the preferred shares or to bring effective the registration of the underlying common shares.
Although this may give rise to possible contract-based claims by the holders of the securities, the few courts that have dealt with the issue have not been consistent in their responses. The responses have been largely driven by the specific facts, but the alternatives seem to be to uphold and enforce the literal reading of the certificate of designation, or to deny mandatory injunctive relief to the holder of the convertibles (based on availability of the legal remedy of damages or ambiguity in contract language).
Litigation commenced by the holders of floorless convertibles to compel conversion has met with accusations from the issuing companies alleging manipulation and bad faith on the part of the holders. Some issuers also have filed suits alleging manipulation against holders of floorless convertibles to prevent conversion.
It is too early to tell whether the volume of litigation will grow or what judicially created rules will emerge from these cases. On the one hand, the holders of the securities have a fairly straightforward contract claim for conversion and registration of the common shares. On the other hand, an issuer that can demonstrate manipulative activity or other illegal activity on the part of the holders of these securities should fare well in halting or limiting a conversion or registration. The few cases that have surfaced to date have either settled or remain unresolved on the merits.
What Should Be Done?
With at least hundreds of these offerings taking place – and apparently more than a billion dollars being raised annually – it would seem that some regulatory or legislative restrictions are needed. The NASD's recent interpretive release is a step in the right direction, but it is too early to gauge what impact it may have. In the meantime, the harm that can be done invites aggressive enforcement of the anti-fraud and anti-manipulation provisions of the federal securities laws and SRO rules.
Given the evidentiary difficulties a manipulation case presents and the absence of a private right of action for aiding and abetting since the Central Bank case, and because some of the questionable conduct occurs through brokerage firms and other regulated entities, the most effective enforcement mechanisms probably rest with the SEC and SROs. To date, no enforcement actions have surfaced, and one of the market participants who profit from these securities has stepped forward to help limit the abuses connected with these offerings.
Issuers' Awareness
In the interim, the best precautions against the harmful aspects of floorless convertible securities lies in the awareness on the part of the issuers and their counsel of where the danger lie. In general, if these securities can be avoided, they should be.
If such an offering is the only alternative, issuers should use contractual restrictions to mitigate the potential hazards of these securities. For example, the floorless convertible holder's ability to sell short or to enter stock-loan arrangements should be carefully and tightly restricted – and probably prohibited altogether, if possible.
In addition, negotiating a minimum holding period before the common shares may be registered and resold is useful, as is restricting the right to convert (or the number of shares that may be converted) if the stock price drops below a certain point. A floor on the number of shares obtainable in a conversion, or a manageable cash payout alternative to a stock conversion, may also be useful to limit the harm these instruments can cause.
Finally, issuers need to perform the due diligence necessary to ascertain what type of investors they are dealing with before issuing these securities, including pursuing references to their experience (and that of the issuers) in such prior investments.
Beyond contractual provisions, the issuer may sometimes have the ability to deny the right to convert or to defer registration of the underlying common shares. Although both alternatives present obvious litigation risks, the obligation of the issuer to disclose fully all material facts before bringing a registration statement effective may justify deferring conversion, registration or both, especially when manipulative activity appears to be having a substantial impact on the issuer's common stock and, perhaps, on the company's listing status and ability to survive.
The floorless convertible security may in some instances be the only way a company can continue in business, and under such circumstances it may protect existing shareholders from a substantial or total loss of their investments. Thus, as a financing tool, this instrument has potential value and utility to some companies and their shareholders.
When investors in floorless convertibles are essentially guaranteed a profit, however, it has usually meant that existing shareholders pay the price through massive dilution and a collapsed stock price.
Unless and until tighter rules are in place, the only recourse for companies in need of such financing will be to understand thoroughly what they are getting into and to negotiate contractual provisions sufficient to blunt some of the more harmful features of these securities.
This article is reprinted with permission from the February 15, 1999 edition of The National Law Journal. © 1999 NLP IP Company.
Law News Network website at http://www.lawnewsnetwork.com.
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if there's a floorless debenture being discussed,
this article is a good one:
http://www.law.com/cgi-bin/gx.cgi/AppLogic+FTContentServer?pagename=law/View
&c=Article&cid=ZZZTDP4AUFC&live=true&cst=1&pc=0&pa=0
Toxic Convertibles, Poisoned Financing
Stacy Mosher
The Deal
November 22, 2000
Shareholder backlash is building against "floating" or "floorless"
convertibles, a type of so-called vulture capital financing that benefits an
investment bank if a company's share price drops.
Public companies are increasingly resorting to lawsuits to nullify these
agreements when their implications become clear. And individual shareholders
are exploring their own legal options -- both against investment banks and
the executives who agree to the flawed financing -- to compensate them for
loss in shareholder value.
Shareholders are also putting pressure on the Securities and Exchange
Commission to require more stringent disclosures that could nullify the most
harmful effects of these instruments.
These financing instruments, often referred to as "toxic convertibles," work
as follows:
Preferred shares are issued to investment banks that can be converted later
into common stock at a discount to the prevailing market rate. Under the
terms of many floating convertible financing agreements, the conversion can
take place earlier and more shares can be converted if the company's share
price drops.
Toxic convertibles are more commonly sold by smaller and less prominent
investment banks, but larger institutions have also on occasion used them.
Companies entering into these arrangements often find that their share price
heads due south soon afterwards. The dilution resulting from conversion of
large quantities of shares puts downward pressure on the share price,
sometimes sending the stock into a death spiral.
Some companies claim the devaluation of their share price is caused by more
than just dilution, and they have taken the financing firms to court,
alleging market manipulation.
Two cases were settled in 1999 and early 2000, and another case is pending,
against the same investment firm, New York-based Promethean Investment Group
LLC, which has been charged (along with other firms) with conspiring to
drive share prices down through short-selling.
The first case, involving Intelect Communications Inc. of Richardson, Texas,
alleged that Promethean and the other small firms, Angelo, Gordon & Co. LP
and Citadel Investment Group LLC, pushed the price of Intelect stock down
from $1.88 Feb. 24, 1999, to 66 cents per share April 21. During that same
period, the short-interest position in Intelect stock shot up from less than
1.5 million shares to more than 3 million shares.
After Intelect announced a moratorium on conversions of preferred shares,
the price of the common stock rebounded to $1.97 within days -- evidence,
argued Intelect, that the price drop resulted from market manipulation by
the firms.
The case was settled unusually quickly -- a month after the complaint was
filed in June 1999. Under the terms of the settlement, Intelect issued a
portion of the common stock claimed by the investment firms and cancelled
the remainder of the preferred shares.
The investment firms also agreed to a prohibition on involvement in short
sales or other transactions through which they would benefit from a drop in
Intelect shares, as well as agreeing to restrictions on the quantity of
Intelect shares to be traded on any single day.
The second case was filed by Ariad Pharmaceuticals Inc. of Cambridge, Mass.,
at the end of October 1999 against Promethean and a related company, HFTP
Investment LLC. Ariad alleged that Promethean admitted to shorting 2.5
million shares of Ariad common stock -- more than 10 percent of the total
outstanding shares -- and that the short-selling drove the Ariad stock price
down from $1.81 June 2, 1999, to 56 cents by Oct. 11, 1999.
Ariad charged that if Promethean continued to manipulate Ariad's stock "like
a yo-yo," it stood to realize a 300 percent return on its investment within
one year.
The case was settled in January, shortly after Ariad submitted a request for
all trades carried out by the investment firms through a New York brokerage,
Cathay Financial LLC. In the settlement, Ariad agreed to convert 612
preferred shares into roughly 1.08 million shares of common stock, which
Promethean then agreed to trade in the public market to cover its short
position.
In the most recent case, Log On America Inc. of Providence, R.I., alleges
that Promethean, Citadel and Marshall Capital Management Inc., an affiliate
of Credit Suisse First Boston, shorted Log On stock and drove the price from
$17 per share in February down to $2.50 by Sept. 26. The price plunge made
the firms eligible to purchase approximately half of Log On's common stock.
Marshall allegedly informed Log On that all of the investing firms held
"massive" short positions in Log On stock.
Court filings also list 12 other public companies in which Promethean and
Citadel have allegedly engaged in similar market manipulation.
Promethean released a statement describing Log On's claims as "outrageous"
and "the product of either reckless speculation or ... deliberate malicious
intent."
As shareholders are becoming more aware of the shortcomings of floating
convertibles in relation to shareholder value, Promethean's string of
lawsuits has brought it under increasing investor scrutiny.
In late August, executives of Nashville-based Shop At Home Inc. were quoted
in The Tennessean saying that an increasing number of investors had
expressed misgivings over a recently announced preferred stock arrangement
with Promethean.
"In the case of Promethean and certain other companies, you can't see
anything good in these deals," says Aaron Brown, founder of New York-based
eRaider.com, a mutual fund set up to unite shareholders against stock fraud
and poor management. "There's no protection written in, and the terms are so
inequitable that you can hardly believe company management ever discussed
them or even read them before signing."
Brown has been using Internet bulletin boards to rally investor pressure
against toxic convertibles. "We've been accumulating the necessary data to
show that these arrangements almost never work," Brown said. "But there is a
definite gradation of quality. Agreements involving Shoreline Financial
Corp. in California are the best you can find, with the necessary safeguards
and limits built in. Then you get the big investment banks like PaineWebber
Inc., which are usually not the worst."
Brown believes there's not enough money at stake in most of these cases to
attract the contingency-based law firms that typically take on class
actions, and inquiries with some leading class-action law firms indicate
that, in fact, toxic convertibles have not yet appeared on their radars.
But some lawyers who have conducted lawsuits against investment banks such
as Promethean on behalf of public companies believe that in theory similar
lawsuits could be brought by ordinary shareholders. "There would be a lot of
technical hurdles, but if shareholders asked me to get involved, I'd look
into it," one attorney said.
ERaider has targeted a toxic convertible signed by Transmedia Asia Pacific
Inc. as a particularly egregious case. "It was a good business with good
potential, but once it signed the agreement it lost 90 percent of its market
cap," Brown said.
Transmedia presents an example of the difficulties faced by this kind of
shareholder activism. Brown said he originally had the support of
institutional shareholders, but many of them sold off their stock, and
others went off and negotiated their own side deals. Worst of all, "The
people who were scammed are blaming us for exposing it and driving the price
down further," he said.
Brown says eRaider has decided to fight toxic convertibles in general in
recognition of the difficulties of winning individual cases. The group has
submitted proposals to the SEC to improve disclosure of toxic convertibles.
An SEC spokesperson said at present floating convertibles do not need to be
disclosed until the point where the investor wants to convert the preferred
shares into common stock for resale. At that point, the full risks of the
investment, including possible dilution and decline in share price, has to
be disclosed in a prospectus. There is no requirement to outline these same
risks to existing shareholders at the time the agreement is signed.
The spokesperson declined to comment on the possibility of more stringent
disclosure requirements in the future, but added, "It's a priority for us to
look at ways to make investors more aware of risks in investing."
The National Association of Securities Dealers Inc. calls for disclosure and
shareholder approval for what it terms "Future Priced Securities," but
shareholder approval is not necessary if the agreement caps conversion of
the security at 20 percent of the common stock, or if a floor is placed on
the conversion price. The 20 percent cap is easily evaded if conversion is
made in stages, and if the floor of the conversion price is low enough,
shareholders can still suffer significant depreciation of their holdings.
At the same time, any prudent reader of the NASD rules can detect a strongly
cautionary note toward this type of financing: "[T]he issuance of Future
Priced Securities may be followed by a decline in the common stock price,
creating additional dilution to the existing holders of the common stock."
But Brown believes the NASD rules do little to protect shareholder interest.
"Threatening to delist the company makes things even worse for
shareholders," he said.
Copyright (c)2000 TDD, LLC. All rights reserved.
Disclaimer: Advertisements embedded in my posts at IHUB are the sole responsibility of IHUB. I do not endorse them in any way, have any input to their content, & recieve no compensation from them.
It is so hard to wait isn't it? Once I would like to pick a stock that takes off right away and stays up..that's just a dream I have. Boy rb sure has been blasted with paid bashers..they have brought them from out from under the rug so to speak. I own another stock, dnap, that has also been under stong attack from the bashers....should mean green for those of us who stick it out.It will be nice when I won't have to work..but can work the hours I want.........
doxdox - hope this is the 2nd day of
your three day period!
thanks
heart
FUTURE VALUATTION OF SSPC AFTER THE PLANT IS OPENED AND INTO PRODUCATION
Found this on RB. Can I have a password now?
Any comments?
As I promised, here is the information I want to share with SSPC stockholders and potential SSPC buyers, shorts/bashers don't read, it is not for you.
Since most(if not all) of the alternative energy companies are not generating profits, as we have done for these Internet companies, the only common measure of the stock valuation is through Sales/Price ratio instead of P/E ratio. In fact, SSPC might be one of the first companies will generate profit when the plant opened (because of high profit margin and government subsidize the cost of purchasing of soybeans, Mark Taylor already indicated the company will be profitable for the next quarter when the plant opens).
Here are 13 Alternaitve Energy Stocks:
COMPARISIONS:
TICKER P/S PRICE MKT CAP SALES
HPOW 151 $13 $702M 3.92M
FCEL 48 $73 $1.2B 24M
BLDP 78 $55 $4.86B 61M
DCH 68 $2.25 $63 M 840K
PLUG 223 $33 $1.46B 6.47M
EFCX 16 $3.3 $88 M 4.13M
VLNC 42 $7.6 $311M 6.68M
CPST 77 $34 $2.6B 28M
HYGS 19 $5.6 $198M 7.89M
MCEL 243 $12 $316M 0
PRTN 243 $12 $413M 883K
MKTY 62 $10 $360M 5.75M
EVRC 50 $5.4 $56M 795K
ESLR 30 $6 $141 $2.1M
Numbers are straightly from yahoo finance, annual sales revenue are projected by Yahoo based on first quarter revenues. MCEL has no revenues, it is reasonable to assign the top number of the P/S ratio 243 to MCEL.
Of these 13 alternative energy companies:
* AVAERGE P/S RATIO: 81
* AVERAGE STOCK PRICE: $20.47
* AVERAGE MARKET CAP: $971 million
SSPC SALES PROJECTION:
Based on production capacity of 10 million gallons for the first plant, assume the average price of the biodiesel is $2/per gallon, the total revenue projected from the plant is estimated to be $20 millions. This is a very conservation estimation of the potential revenue for the whole company, because (a) diesel price is likely to increase; (b) the company expects to open more plants this year; (c) the company is not just selling biodiesel, the company is also conducting valued-added service such as Power Generation/sales of power generators etc, (d) lycerin is a by-product of the manfacturing process, it sells at the triple price of biodiesel, the revenue is not counted here; (e) The company is already providing about 1.2 million gallon biodiesel to public school buses in Arizona, the revenue is not counted here.
Clearly, this projection is purely based on the valuation of the first plant.
Let's based on O/S of 42 million shares, current price of 0.43, and projected revenue of $20 million, the current numbers for SSPC are:
Sales/Price Ratio: 0.85
Current price: $0.43
market Cap: $17M
There are several ways to calcuate the fair market value of the stock in a year based on the first plant:
(1) Most Conservative Estimation:
If we use the low end of the P/S ratio in the whole group, assuming we raise the P/S ratio to 16 (EFCX):
1 year target price for SSPC would be: $8.09
and the market cap is $339 million.
Remember, this is the most conservative estimation based on the lowest P/S ratio of EFCX.
(2) Medium and Avarge Estimation:
If we raise P/S Ratio of SSPC from 0.85 to sector average of P/S ratio of 81:
1 year target price for SSPC would be: $40.97
and the market cap is $1.72B
This is the moderate estimation, based on the sector's average P/S ratio of 81.
(3) Top Estimation:
If we raise the P/S ratio of SSPC from 0.85 to the second highest of the sector: 243 (PRTN)
1 year target price is: $122
and the market cap is: $5.1B
Clearly, PRTN is one of the most overvalued stock in the whole alternative energy sector. With enough hype of bio-diesel by the media and the Street, who knows, maybe this price could be achieved like PRTN.
(4) Equal Estimation:
FCEL is about the same size (sales projection wise with $24 million sales) as SSPC, raise the P/S ratio of SSPC to FCEL:
The target price for SSPC would be: $24.28.
CONCLUSION: I would conclude the current stock price is very undervalued, an increase in the stock price of 2,000% from the current level can only bring it in par with the lowest P/S ratio in the alternative energy sector. As far as these speculations of the first plant is already factored in the stock price, you do the math and calculate it again.
I open to any suggestions or doubts. This is just my ownopinion, please don't based on my research to buy or sell stocks. However, I would recommend my friends read this board add to you SSPC holdings until the last penny is spent.
Good luck!
FUTURE VALUATTION OF SSPC AFTER THE PLANT IS OPENED AND INTO PRODUCATION
As I promised, here is the information I want to share with SSPC stockholders and potential SSPC buyers, shorts/bashers don't read, it is not for you.
Since most(if not all) of the alternative energy companies are not generating profits, as we have done for these Internet companies, the only common measure of the stock valuation is through Sales/Price ratio instead of P/E ratio. In fact, SSPC might be one of the first companies will generate profit when the plant opened (because of high profit margin and government subsidize the cost of purchasing of soybeans, Mark Taylor already indicated the company will be profitable for the next quarter when the plant opens).
Here are 13 Alternaitve Energy Stocks:
COMPARISIONS:
TICKER P/S PRICE MKT CAP SALES
HPOW 151 $13 $702M 3.92M
FCEL 48 $73 $1.2B 24M
BLDP 78 $55 $4.86B 61M
DCH 68 $2.25 $63 M 840K
PLUG 223 $33 $1.46B 6.47M
EFCX 16 $3.3 $88 M 4.13M
VLNC 42 $7.6 $311M 6.68M
CPST 77 $34 $2.6B 28M
HYGS 19 $5.6 $198M 7.89M
MCEL 243 $12 $316M 0
PRTN 243 $12 $413M 883K
MKTY 62 $10 $360M 5.75M
EVRC 50 $5.4 $56M 795K
ESLR 30 $6 $141 $2.1M
Numbers are straightly from yahoo finance, annual sales revenue are projected by Yahoo based on first quarter revenues. MCEL has no revenues, it is reasonable to assign the top number of the P/S ratio 243 to MCEL.
Of these 13 alternative energy companies:
* AVAERGE P/S RATIO: 81
* AVERAGE STOCK PRICE: $20.47
* AVERAGE MARKET CAP: $971 million
SSPC SALES PROJECTION:
Based on production capacity of 10 million gallons for the first plant, assume the average price of the biodiesel is $2/per gallon, the total revenue projected from the plant is estimated to be $20 millions. This is a very conservation estimation of the potential revenue for the whole company, because (a) diesel price is likely to increase; (b) the company expects to open more plants this year; (c) the company is not just selling biodiesel, the company is also conducting valued-added service such as Power Generation/sales of power generators etc, (d) lycerin is a by-product of the manfacturing process, it sells at the triple price of biodiesel, the revenue is not counted here; (e) The company is already providing about 1.2 million gallon biodiesel to public school buses in Arizona, the revenue is not counted here.
Clearly, this projection is purely based on the valuation of the first plant.
Let's based on O/S of 42 million shares, current price of 0.43, and projected revenue of $20 million, the current numbers for SSPC are:
Sales/Price Ratio: 0.85
Current price: $0.43
market Cap: $17M
There are several ways to calcuate the fair market value of the stock in a year based on the first plant:
(1) Most Conservative Estimation:
If we use the low end of the P/S ratio in the whole group, assuming we raise the P/S ratio to 16 (EFCX):
1 year target price for SSPC would be: $8.09
and the market cap is $339 million.
Remember, this is the most conservative estimation based on the lowest P/S ratio of EFCX.
(2) Medium and Avarge Estimation:
If we raise P/S Ratio of SSPC from 0.85 to sector average of P/S ratio of 81:
1 year target price for SSPC would be: $40.97
and the market cap is $1.72B
This is the moderate estimation, based on the sector's average P/S ratio of 81.
(3) Top Estimation:
If we raise the P/S ratio of SSPC from 0.85 to the second highest of the sector: 243 (PRTN)
1 year target price is: $122
and the market cap is: $5.1B
Clearly, PRTN is one of the most overvalued stock in the whole alternative energy sector. With enough hype of bio-diesel by the media and the Street, who knows, maybe this price could be achieved like PRTN.
(4) Equal Estimation:
FCEL is about the same size (sales projection wise with $24 million sales) as SSPC, raise the P/S ratio of SSPC to FCEL:
The target price for SSPC would be: $24.28.
CONCLUSION: I would conclude the current stock price is very undervalued, an increase in the stock price of 2,000% from the current level can only bring it in par with the lowest P/S ratio in the alternative energy sector. As far as these speculations of the first plant is already factored in the stock price, you do the math and calculate it again.
I open to any suggestions or doubts. This is just my ownopinion, please don't based on my research to buy or sell stocks. However, I would recommend my friends read this board add to you SSPC holdings until the last penny is spent.
Good luck!
JNelson: I would like to have the password for live chat
on SSPC.
Thanks
arkieboy
rosesmom2000, most folks will continue to post on RB and wade thru the bashers there. But if we gt another RB outage as we did last weekend and the weekend before, everyone will show up here. They may also show up on occasion for a private chat. Jnel did a great job setting this up and should be commended.
Best
Life
There has to be more longs in this stock than just us who came over to this message board. The RB is so cluttered up with so much nonsense and "garbage" I hate to even go there anymore. Where are you JNelson? Come and give us some encouragement. The stock has performed relatively well I would say. I got in on May 21 at .09 and it is now at .43. I could have sold and bought it back and turned some profit but I guess I have been an investor for too long and not a churner. Maybe I should become one but that is not my way or style of investing. Most play it like Reno or Vegas I think. Then it does become pure gambling. I mainly bought it because I like what Biodiesel will do for our environment. I drove a Buick Park Avenue Diesel for many years and loved it but it sure did smell. Good luck to all of us next week and the week after. Where is our boy "Drooy". Miss his posts. He is knowledgeable and gave us a lot of good charts, etc to follow and I appreciated that very much.
ENERGY STOCKS
Oil prices may get boost over Iraq
Export outlook, OPEC production boost gasoline
By Myra P. Saefong, CBS.MarketWatch.com
Last Update: 7:53 PM ET May 31, 2001
NEW YORK (CBS.MW) -- Energy futures prices may be on the rise Friday following a fresh threat by Iraq to withhold its oil exports.
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At the United Nations, the Security Council agreed to extend for one month its oil-for-food program that lets Iraq sell crude on the world oil market even as it remains under UN-imposed trade sanctions. But Iraq, which is demanding a six-month extension, rejected the latest deal, designed to give the UN time to restructure the sanctions.
Iraqi Ambassador Mohammed al-Douri reiterated Iraqi threats to cut the production of oil should the Security Council eventually approve a U.S.-British sanctions proposal. See related story.
In earlier futures trading highligts, June unleaded gasoline closed at $1.0632, up 2.2 cents. June heating oil gained 0.35 cent to 77.95 cents a gallon on the New York Mercantile Exchange.
The July contracts, which became the front-month contracts for the petroleum products at the close of the day's trading, settled lower. July unleaded gasoline fell by 0.04 cent to 95.58 cents a gallon. July heating oil fell 0.48 cent to 77.36 cents a gallon.
If OPEC doesn't increase production quotas when it meets on Tuesday, then the market "would almost certainly tighten," Lynch said.
Traders remain focused on next quarter's supply and demand balance, said Mike Lynch, chief energy economist at DRI-WEFA, a unit of financial services firm Global Insight.
The oil cartel appears "willing to take the risk that prices rise instead of the smaller risk that inventories will get out of hand," he added.
Gasoline supplies head higher
The latest data from the American Petroleum Institute and the Energy Department revealed that gasoline inventories rose by 1.6 million and 4.3 million barrels, respectively.
On average, analysts polled by Bridge News had expected a rise of only 1.2 million barrels.
The API also said stocks of reformulated gasoline, which are used in many major cities in the U.S., climbed by 1.8 million, while the Energy Department posted a 2.3-million-barrel rise.
"Just as the summer driving season kicks off, additions to gasoline stocks lead to some relief in the gasoline market," Thorsten Fischer, an economist at Philadelphia, Pa.-based Economy.com said in a weekly note.
Still, any "year-on-year surplus will disappear quickly," Fischer said, if it turns out that there are problems with reliability of refinery operations.
This, he said, stands as a "key issue" with the nation's refineries running virtually flat out. The API's measure of refinery production rose slightly to 95.3 percent of capacity from the prior week's reading of 95.2 percent.
Distillate supplies, which include heating oil, increased by 1.9 million barrels and 2.2 million barrels the API and Energy Department said, more than triple expectations for a rise of 600,000 barrels.
Crude inventories fall unexpectedly
Refiners' struggle to keep up with the demand for gasoline during the summer driving season helped prompt a decline in last week's crude supplies.
Crude inventories as of the week ended May 25 fell unexpectedly -- by 3.98 million and 1.8 million barrels, according to the API and Energy Department, respectively. Analysts surveyed by Bridge News had forecast a rise of 1.2 million barrels on average.
However, July crude shed 18 cents to $28.37 a barrel in sympathy with gasoline's earlier price decline.
In related news, July natural gas declined by 6.7 cents to $3.914 per million British thermal units following a 99-billion-cubic-foot rise in last week's stocks. See related story.
Oil issues strengthen
Amid the uncertainty over OPEC production and quota compliance, Iraqi supplies and demand concerns, key oil indexes closed mostly higher.
Fortis Group oil analyst Laurent Lequeu believes that even though there is a risk to oil company earnings this year given the uncertainties, the sector will still remain on the upside.
"After the relative strong performance of the sector these last weeks, we maintain our neutral rating on the sector," he said in a research note, emphasizing favor in shares of Royal Dutch Shell (RD: news, msgs, alerts) and ExxonMobil (XOM: news, msgs, alerts) .
Oil company shares reflected the positive outlooks. The Oil Service Index (OSX: news, msgs, alerts) gained 1.6 percent to 126.45 as shares of Nabors Industries (NBR: news, msgs, alerts) tacked on $1.41 to trade at $50.85.
Meanwhile, the CBOE Oil Index (OIX: news, msgs, alerts) climbed by 0.1 percent to 341.87. Shares of Kerr-McGee (KMG: news, msgs, alerts) tacked on $1.01 to close at $69.67.
And the Amex Natural Gas Index (XNG: news, msgs, alerts) rose by 0.7 percent to 246.92. Shares of EEX Corp. (EEX: news, msgs, alerts) climbed 36 cents to close at $4.45.
Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.
More ENERGY STOCKS
•Oil prices lower despite Iraqi threat 4:15pm ET 06/01/01
•UN passes short-term Iraq oil pact 7:44pm ET 05/31/01
•Petroleum supply data mixed 5:42pm ET 05/30/01
•Oil stocks mixed; crude rises 4:11pm ET 05/29/01
•Energy stocks mixed; gas prices dip further 4:17pm ET 05/25/01
Latest Industry News
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•Iraqi threat clouds oil picture 3:59pm ET 06/01/01
Correction in p 3
"I sure hope it is the FORMER"
DoxDox
Always like your posts on RB. This is a good board for longs, however, I think most of us have talked this company to death on RB about past performance, possibilities of the future, opening of the plant, etc. We need more news! Soon! I hope SPCC will provide us with positive PR next week concerning new contracts. This shoud drive the stock up to the dollar we all expect it to reach easily. It would also give us something to talk about.
Please keep up the good posts here and at RB(although I see myself going less and less to RB... to much garbage).
Take care and LOL,
Andy.
Not many posts on this site. Too bad, thought it would be a haven for thoughtful posters.
So, any takes on 3 down days in a row? This last one a 7% was kinda painful.
Is this to be our fate until they announce some contracts? I think the "plant is opening June 11" has run out of juice as a significant mover of this stock.
IMO, people are waiting to see contracts and revenues. I wonder if SSPC has contracts in hand and is waiting to announce them or if no one will finalize a deal until the plant is online and proven. I sure hope it is the latter.
Happy with the strenghth SSPC showed in the .40s range. Looks like it has a great platform from which to launch a run at $1, but IMO, it will take good news to get us there.
Other thoughts?
Sorry to be OT again but ARSU is showing 150% gain today. Don't have a clue what is going on but the Bull ARSU board is full of "hype" except it is happening. Just thought I would pass it on.
J
OT: What do you all think of Onsite Energy? ONSE. I ask (sorry off-topic) because I have been researching and it looks pretty good but there seems to be little interest ie volume is low. Three profitable quarters in a row. Steady rise in stock price. They do energy efficiency projects in California...only .36 right now. Has doubled steadily over the last month or so. I would like Drooy's opinion on the chart.
J
JNelson...I need a password..thanks
jnelson...i need a password... i checked my mail..nothing there....thanks
JNel
Thanks for the response and the board. What do you all think of Onsite Energy? ONSE. I ask (sorry off-topic) because I have been researching and it looks pretty good but there seems to be little interest ie volume is low. Three profitable quarters in a row. Steady rise in stock price. They do energy efficiency projects in California...only .36 right now. Has doubled steadily over the last month or so. I would like Drooy's opinion on the chart.
J
Good evening, J Nelson - What a relief this board is to come to. Hope we can keep it "clean". thanks again for setting it up for us's.
Hello JNel could i get a Password please ? thanks in advance ..you think the MMs got the new shares ? is that why they called the company? as mentioned on RB
Jipsi,
as far as I can find out SSPC is the only stock trading that will be producing diodeisel ,,there are about 6 other companies making it but they don't trade...
JNelson, may I have a password please
this'll be nice....an exchange of facts only. In NSCT we had to set up a "moderated borad" and even that got out of hand as the "moderator/originator" turned bearish on the stock and let anyone in....good luck.
Hopefully with less traffic here someone will be able to answer my questions.
I would like to know if there are any competitors, whether publically traded or not, that are currently making OxyG B60 (I think) biodiesel? Also (an I am not bashing, came here to get away from that rubbish but I did notice an error on the company website and was wondering if anyone has an opinion. It say 52 week high of 5.50 and low of .14.
Also I would love the password but figure I will have to prove I have good intentions first. I do own stock. I did sell some but just to get FREE stocks.
Thanks
J
Here's a movie for your viewing pleasure.
http://mm.dfilm.com/php/movie_route.php?id=38446
JNelson
May I have the password please?
This LA Times article is exactly the reason I came over here from RB. What are the odds you would have pulled this out of all that BS? Nice Job!
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