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US Trustee Rips AgFeed's Bid To Retain Foley & Lardner
http://www.law360.com/articles/465640
Hi MM/SH,
Been on vacation myself and still on so don't spend as much time researching and posting - but there is not much to follow other than the docs on the BMCGROUP website - something almost daily here -
http://bmcgroup.com/restructuring/Docket.aspx?ClientID=323
Interesting article below in recent rulings in the Chinese courts - both involving foreign owners like us owning things we were not supposed to (allegedly). First eg has the China courts compensating the shareholders. Also interesting to note that U.S. listings are still coming to market with VIE structures.
The law firm that wrote this obviously has a lot of expertise in this area.
http://www.lexology.com/library/detail.aspx?g=90f823b1-02cb-4b6a-aabb-de857e45c246
Thanks for making all those phone calls to Mackinac.
New 8K - Business Development Asia LLC trying to sell some hogs
"The Company and AgFeed USA, with the assistance of their financial advisers, Business Development Asia LLC and BDA Advisors Inc., are continuing to actively pursue competing offers for the Sellers’ assets in connection with the Chapter 11 bankruptcy proceedings, as well as sales of the Company’s Chinese subsidiaries and assets. The Company, AgFeed USA and their advisors cannot at this time predict the amount of proceeds from any transaction or transactions that might result from that pursuit."
Again, Chief Restructuring Officer Keith Maib is trying to sell the China assets, China losing foreign capital and needs to straighten up its act to reverse, pig prices headed up and corn trending down.
You never know, we might just get a $79M bid the other half of the company.
Now you go and look up some more law book links to post while shareholders wait to see if in fact we do own anything in china.
No doubt, Mr. Big, but does the UST/judge have our back?
If there is not the prospect of equity, and/or the assumption that it will not occur without an EC, no EC will be formed...allegedly.
I am going to assume you will answer that, no, and that no one has our back - the legal system is f-up - lawyers are a-holes (can't argue with that) - and that we will get nothing....so I have already slit my wrists in preparation for your answer.
"Try $550-$650 blended rate which includes paralegals."
When will India get there legal outsourcing act together???
I for one appreciate your post if for no other reason than to get people irritated as heck about our legal system. In the 1st place - because it lets this happen (to hold out an investment when we never had control in the first place.......as OWNERS) and 2nd to insult us by charging $600 per hour for a-holes salesmen)to fix it. AUUGGGHHHH! Wish I could strangle some legal-pigeons....without legal recourse, of course.
By the way, your reply will have little effect on my actions. Have already figured out your function in life - or your objective in regard to this stock -
http://www.imdb.com/title/tt0318374/
As stated before - I am holding because the China assets have value. The political climate in China is trending for the better (they need capital); the pig/corn ratios are trending positive. My hope is the assets are sold very soon and the lawyers get their walking papers with no or minimal payoff.
"Capital goes where it's welcome and stays where it's well treated." -- Walter B. Wriston
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The Last Stampede: Capital Now Exiting China
Gordon Chang, Forbes
8/04/2013
http://www.forbes.com/sites/gordonchang/2013/08/04/the-last-stampede-capital-now-exiting-china/
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So, Wall_Street...how do you think China will react to the above - by kicking foreign investors in the butt as they head out the door - or addressing the issues?
Variable interest entity structure in China
King & Wood Mallesons
Zeng Xianwu and Bai Lihui
China
February 9 2013
http://www.lexology.com/library/detail.aspx?g=a9d30374-f27f-4be7-84b8-2a3772ee84cf
"No idea if those assets are real, or real shanty shacks in someone's back yard."
No idea? You appear to tend toward hyperbole.
Potential buyers do not need the (cooked?) books to value of what is in China. They do need feet on the ground to inspect the old and new facilities, verify what's in the banks and the validity of the A/Rs.
Is your argument the WSFs, etc. are mirages or that U.S. investors will not get compensated for them?
--- on the compensation/ownership issue:
Looks like China is trying to clean up its act so it can get more money (thanks to Sherry on the Yahoo board for posting). Whether it is temporary or not - I don't believe the C. govt wants headlines about US investors getting ripped off - esp. in the pork industry.
http://www.bloomberg.com/news/2013-07-29/xiao-turns-gray-as-china-ipo-freeze-precedes-new-rules.html
Nothing in the above link about VIEs, but money is still going into VIE structures:
http://www.ifrasia.com/baidu-banks-on-us-bond-buyers/21100199.article
Given the C. govt officials are again in need of foreign capital - think we are back back to this:
"As a general rule, the PRC authorities typically do not like the idea of foreign investors using indirect ways to get around legal restrictions on foreign investment in the first place; however, in order to attract foreign investment in technology focused industries such as telecommunications and internet, the PRC authorities have tended to acquiesce the usage of the VIE structure in China."
Yes, Mr. C, I realize you were on the call. You asked some excellent questions by the way, thank you.
Have never and would never accuse anyone of shorting a 10 cent stock. Once that motive is removed, have to look for others. Just noted it was strange that some of the most knowledgeable posters (w/ consistently negative slants...that may turn out to be not negative, but realistic) disappeared one the shareholders went thru with the ad hoc.
I don't enjoy working with lawyers either. They try to make the simple complex - it starts with the vocabulary they use, extends to the sentence structure, all they way to how the material is presented....all so they can charge $400 per hour for something, that in case, a business person might do for $50 per hour with an executive summary, bullet points, and simple chart showing benchmark valuations, etc. I was involved in the process too - might have even been labeled a 'key influencer' in Strategic Sales terms, and I lost count of how many times I had to ask for a China Asset Plan.
Anyway, I think many of us understand the way the billing works and who will pay for what at each stage. EG's interests are aligned with shareholders to a certain extent. If EG is unable to convince the US Trustee there is SIGNIFICANT equity - no EC is formed. EG took a chance - did some free work up front for the prospect of a boatload of billable hours.
Still holdin' my shares because you just don't make sense. AgFeed was worth $100M plus before M2P2. Sell M2P2 and AgFeed is worth nothing?? Even though the WSFs are finally built and up and running with each sow kicking out 20 little piggies per year?
We know little about the financial and operational status of the China assets. No one is counting a full value offer, but if EG or Regnante or Perry Mason is able get something out of China and get the judge/trustee to 'care' about these assets and the prospect of significant shareholder equity, they will have earned their $400 per hour (given this is the system we have to deal with ;)
Howard Marks point out: “The future does not exist - it’s only a range of possibilities.”
You seem to have a different opinion...perhaps you should short the stock?
You are better off not putting much credence in info you read on this or the Yahoo message board. There were several posters that were extremely knowledgeable that shared all kinds of info - mostly with a negative perspective - but they disappeared once the shareholders formed an ad-hoc Equity Committee. Better to pay attention to this site - just the facts:
http://bmcgroup.com/restructuring/Docket.aspx?ClientID=323
Latest filing (8/2) is from James Regnante. He is working for shareholders - separate from the Yahoo/iHub shareholders that are working with Elliot Greenleaf. We don't know anything about him - not sure if he is a very large shareholder - whether he has retained separate council...but he sure is motivated.
You will see criticism of his efforts - and again, who knows the motivation of all these posters - sometimes I think half the posters are agents for shareholder firms and half are agents for creditor firms..and now I guess it is legal for firms themselves to post on msg boards (I am guessing White Knight De = Elliot Greenleaf lawyers and if that is so, they should state it)
Anyway, note the date hearing below and think about how anxious you want to be with regard to figuring out a sales price. I have no idea.
---------------------------
UNITED STATES BANKRUPTCY COURT
District of Delaware
In Re: Chapter: 11
AgFeed USA, LLC
510 South 17th Street
Suite 104
Ames, IA 50010
EIN: 75-3088748 Case No.: 13-11761-BLS
M2 P2, LLC
NOTICE OF HEARING
James Regnante has filed a Motion for Discovery and to Safeguard China and/or other Foreign Assets.
A hearing regarding the motion is scheduled for 9/30/13 at 10:00 AM at the United States Bankruptcy
Court, 824
Market Street, 6th Floor, Courtroom #1, Wilmington, DE 19801 .
David D. Bird
Clerk of Court
China Asset Plan
I think we are in agreement that the potential China asset sale is why we gave Elliot Greenleaf the go ahead to file our first objection. Note that it was filed yesterday – Item 67 (thanks, Finbar for posting this website link).
http://bmcgroup.com/restructuring/Docket.aspx?ClientID=323
I have summarized what I believe to be EG’s CAP below. It seems to be to keep the BVI corp structure in place and sell the stock. If no EC were formed, the debtors might not take the same interest in maximizing. As the Eastman Kodak (Finbar just posted) illustrated – EG has to show “substantial likelihood that equity shareholders will receive a meaningful distribution” for an EC to be formed. Not sure that happens without a valid CAP.
------------
Elliot Greenleaf – the China assets will be sold thru U.S. stock purchase; buyer of stock will then control the China entities. These assets are currently outside the bankruptcy and will be accessed only through a 2004 examination. If no Equity Committee, chance that debtors to not attempt to maximize value of China assets…or even pursue sale.
------------
Even the biggest skeptics here seem to be in agreement with EG:
Wall_Street – “Go find someone who knows how to value and sell the Chinese interests.”
M57 – “You can try to sell the BVI, which under normal circumstances would represent the underlying assets, but if the Chinese don't like the deal they will forbid access.”
Comments/corrections?
Darth, this is my last post tonite. I know this because I have reached my 15 post iHub limit. I made that last post - so don't blame M57 - and don't put me on ignore or I will figure out your email. ;)
None of us known each other - we are just trying to form a tentative coalition to get our money back. I believe that hearing someone with the opposite side makes you reexamine your position/test your hypothesis - regardless of their motives.
This is all progressing much faster than my level of (low) knowledge, but I am going forward - and base my decision more on the people that have been around (that have shown business acumen) than the newcomers. Yes, the msg bd advice has been free, and thus far, so has been the legal advice...and now procedures.
I can only hope/dream that you, Ted, Finbar, M57, WallStreet own or acquire enough shares as necessary to get more involved in directing the law firm of your choice to recover as much as possible for shareholders. Elliot Greenleaf has got this all started so it seems like it should be their business to lose, but if they don't shortly demonstrate the expertise we need then it was all a show. As I mentioned, I will not be looking for other legal input (not that it matters). I have already exceeded the Peter Principle in these efforts; however, I will help in any way I can.
madaniels57 latest (posted just one hour ago on the Yahoo board with 1990s Internet functionality)
--------------- madaniels57:
Agfeed was reformed as a WFOE. This is not a classic VIE structure but the WFOE is a descendent of the VIE. The Chinese government approves or denies these structures and they limited VIE's in 2008-09. You see them now only in international funds to my knowledge but there are many similarities with the WFOE.
As to direct ownership. There is none. There cannot be by law. What you own is a stock in a stock in a stock in a agreement. The Agreement is between the Chinese subsidiaries and the holding company. The US investment is also protected by a agreement.
If one party or the other decides that the agreement is no longer valid, it becomes worthless. You cannot make a claim on the Chinese without the Chinese agreeing to it. You can try to sell the BVI, which under normal circumstances would represent the underlying assets, but if the Chinese don't like the deal they will forbid access to the accounts or in some cases the properties. So they control it, not the US holding company, yet in the agreement it will say differently, but you will never see the agreement.
The issues are not whether the structure is a VIE or a WFOE or simply a partnership because it is only as good as the people on either side of it and the laws existing to protect the US or foreign investor. In the case of Agfeed, Puda Coal, CNEP, FUQI to name four in diverse business segments and all essentially in the same situation, the Foreign Investor holding company, the Federal Courts of the US, the SEC, The PCAOB have all failed miserably to exercise any control whatsoever over the so called valuable Chinese assets.
If they don't want to be sold....they will not be sold. The Chinese authorities will not enforce the foreign rights, and there is the problem in a nutshell....With Luck, agreement and a Chinese buyer, Agfeed might get some money out of it's investment. If not........well....Your stock will be revoked soon. And that's a fact. Not a guess.
Wall_Street, I for one appreciate your advice.
Regarding your motives, all one has to do is click on your pseudonym and see you 1,600+ posts on a variety of companies on a variety of subjects. Unless you just took up some part time work for the Creditor's Comm, I am assuming you are just speaking your mind.
So your plan is:
"My suggestion is to go forward with the current 363 sale, then immediately sell the Oklahoma assets via 363, then file a Plan of Liquidation that appoints a Trustee to administer a trust. That way you get all the lawyers off the tit asap. The trustee can prosecute the causes of action, if any, and sell the chinese assets, if they are worth the hassle.
This thing is trading as if the sale is worth 110 million and the chinese assets are worth zilch."
------------
So, they go forward with the current 363 sale, and then sell the OK assets - isn't that the present course of action?
Not sure if that even covers the $95M in debt - end result - we get zero.
You mention the stock is trading as though China assets worth zilch...so the market is telling us we get zero with the present course of action - a confirmation!
If we are on course to get nothing if we do nothing - why not do something? Esp. if there is no cost to us.
The BK judge (or US trustee, not sure) should not allow the formation of an EC if there is not excess equity. By allowing these first steps, are we not allowing the court to make a determination on whether China assets are recoverable?
Buy some shares tomorrow, Wall Street. Then help us out. Someone was at the ask today for 13 cents. With the right expertise and guidance...
May have misinterpreted or may have just been a technique. No, not Brazilian - just went to Thunderbird, studied Portuguese and Latin Amer studied, then worked for a computer firm in Rio back in 1990 - just as inflation was approaching 1,000% and the new prez, Collor, closed the banks to combat inflation - it was hard to sell in that enviro. ;)
Ok, Darth, I will take this first step based on your advice - just don't fully understand and don't like the urgency, but evidently this deadline is important. Will call the law firm right now.
fyi, EG atty just sent me an email saying they will drop these efforts if I am not on board. Not sure if anyone else getting same email.
Again, if they had a plan for China, I would be. I thought that was the purpose of the webinar - that was my entire input to them in prep for the call - all about China - not trying to justify AgFeed US valuation based on Smithfield.
de1013701 just posted this on the Yahoo board:
To my knowledge, AgFeed BVI directly owns all the divisions in China. The ownership is the true ownership but not VIE. It seems to me that Madaniels had tried to mislead.
For shareholders, it is important to make sure that current AgFeed USA creditors cannot claim the assets in China (AgFeed's lawyer and the management need to defend this).
To realize the values of the China assets, AgFeed Industry Inc (that we are the shareholders now) needs to have enough time to look for buyers. There should be some buyers in China who are interested in the China assets. For example, GuangXi ShanYuan modern agriculture and animal husbandry Inc. will likely be interested in the assets in GuangXi province. It was reported that GuangXi ShanYuan has invested 25 million US dollars to build farms that will take piglets from AgFeed western style sow farm in DaHua, GuangXi province to grow into market meat hogs. GuangXi ShanYuan invested another 15 million US dollars to build animal feed facilities in DaHua and it was also reported that the former AgFeed Inc. chairman (Dr. Li) is now heading the R&D department of GuangXi ShanYuan. I do not think that GuangXi ShanYuan has enough cash ready to take over AgFeed's assets in GuangXi province now. It can take sometimes for raise enough cash even they are interested in buying the assets.
The lawyers and financial advisers this morning have essentially zero knowledge about how to sell the China assets.
Shareholders need to make sure that
(1) Shareholders are the owners of AgFeed BVI after the chapter 11 process (after AgFeed USA gone).
(2) Take time to look for buyers to realize the values of the China assets.
Please note that Ivan had moved AgFeed's China headquarters from JiangXi province to GuangXi province. I guess, after moving the headquarter, he has reasonable good control of the China operation.
Darth, as I (and many others) have been writing on the board, and in my communications with EG law firm, this was all about the China assets.
If a law firm could exert some influence which would help the judge rule that a corporate structure needs to be maintained so that shareholders could still 'own' the VIE assets and profit from their growth, or sale to another entity, I would be all for it.
Not clear that this even feasible, or if that is even their plan. If the EG law firm has a plan, other than getting involved ASAP, I am unsure of it - and I have asked them all thru this process - even after the webinar.
Anyway, you have a lot of experience at the executive level, you have legal expertise and you have been 'around' AgFeed for a while...
What do you think we should do?
Wall_Street,
"I have never seen a shareholder's meeting conducted while a company is in bankruptcy."
Was not implying that it would take place during the BK proceedings. You indicated that "there is a VERY real possibility that the now present insiders of the debtor will try to conduct just this one auction and reorganize around the Oklahoma assets and Chinese assets, or also sell the Oklahoma assets and keep the Chinese assets in more or less a shell company"
If that shell company can maintain control ('ownership') of the VIE, then it seems like we have an assets in China. The Morningstar piece I posted a link to indicated there was a chance the VIE structures would be grandfathered in - that was in Sept/2012, so not sure the latest; not sure if that would apply to ag assets.
Regardless - my suggestion regarding a shareholder revolt had to do with after the new company had formed and just before the parasitic behavior got started in earnest.
So, based on what you know so far, WS, what do you suggest we do?
Wall_Street wrote:
"There is a VERY real possibility that the now present insiders of the debtor will try to conduct just this one auction and reorganize around the Oklahoma assets and Chinese assets, or also sell the Oklahoma assets and keep the Chinese assets in more or less a shell company all-the-whilst paying themselves large salaries and burning up what little value may be left for shareholders."
If that happened, wouldn't we be wise to rise up...for once, and vote those so obviously affected by the Peter Principle that they feel that is the only way for them to make money?
------------
on previous post, VIE = variable interest ENTITY
VIE = Variable Interest Equity
It is my understanding that this structure is frequently used when foreigners are precluded from direct ownership of specific sectors in a foreign country...China does not want foreigners owning ag assets.
Here's a recent article on the subject published in SA, but authored by Morningstar.
http://seekingalpha.com/article/868101-buyer-beware-of-variable-interest-entity-structures
Here is a recent post on the subject by Madaniels57. Most of his posts are on the Yahoo board.
-------------
madaniels57
7/20/13
I was hoping you would bring this up on your own and you did...
"While in theory the VIEs are not owned by the shell company domiciled in BVI or Cayman, contractual agreements are in place to ensure that the latter can direct the major business activities of the VIEs and are entitled to most (if not all) economic profits or losses generated by the VIEs, thus satisfying requirements set by the Financial Accounting Standards Board for consolidating the VIEs in the reported financials of listed firms."
In short, this is why our SEC and FINRA and more importantly the PCAOB were satisfied that sufficient shareholder protections existed...so they allowed the use of VIE's and their related WFOE's and even allowed the reverse mergers.
But the reality became apparent when these arrangements failed to protect shareholders time after time after time.
What occurs in these situations varies a little just as the structure of these VIE's vary from firm to firm, but there is a common thread where the US regulatory enforcement people discover that they cannot penetrate the Chinese side of the VIE, and the Chinese authorities responsible for enforcement utterly refuse to get involved, saying that it is a foreign regulatory issue, while another Chinese governing entity responsible for things like national security and sovereignty prohibit the foreign investors from exercising authority in their domains...
Knowing this, the Chinese side simply ignores the entire affair, refusing to respond to inquiries and that is that...So I suspect, although it has yet to happen, that the World Court may be used at some point if they can find a case involving enough damaged people and enough politics to bring the case to the court.
Unfortunately, I see nothing yet, and the authorities on both sides of the argument keep kicking these cans down the road... Less
"Until they can start a dialogue with the US Trustee they don't really know the extent of the uphill battle here"
Just want to make sure we are talking about the same thing - the uphill battle is getting compensated for the assets in China, right?
If so, can't the law firm read the 8/10Ks, BK documentation - understand the situation we are in - research (or already know...IF they are experts in this area) how assets in China were maximized when a U.S. firm using a VIE structure when Chap. 11, or sold, or...
Not sure what the US Trustee has that the law firm needs to be more explicit about their plan of action...WITH REGARD TO CHINA. :)
That's why I was disappointed today.
-----------
There were several shareholders on the call that, like you, have 10X my knowledge in this area. Some indicated they were going to call the to discuss some issues. Hoping to hear what they learned.
Thanks for participating today, Finbar.
"The unsecured creditor committee may or may not be inclined the same way - they may feel that they are close enough to full recovery given the existence of other assets"
Other assets with a value of $16M ($95M - $79M) or more means China assets, right?
The only way the unsecured would not object to this fast track is that they were were very confident value would be realized from China assets.
That's all I want to understand - from one of the creditor committe lawyers, from the lawyers we are considering.
------
Regarding upfront payments - when you addressed this before, thought I understood you to say that it was customary for BK firms to absorb the initial costs of doing the work necessary to petition the court to form the EC...with the understanding that, if successful, they would get the business and start billing the $40K per month for legal services and $20K per month for FA services (that BC requested as a cap during the cc, and had some push back).
Thing I like about this was - the law firm had to very confident they could get value out of China given the math before us. Also, the judge had to be convinced of the same, otherwise he would not sanction an EC.
Again - where were the details on China; where is the egs/precedence?
Wall_Street wrote:
"But they want someone to pony up significant funds (out of your own personal pockets) to file some trivial objections that will be addressed by the CC most likely."
I agree - if the creditors are due $95M, and the bid for US assets $79M, the creditors are already motivated to make sure the bid is increased - so was unsure why we need to file something today.
"Unless the auction results in over 100 million to the estate via the upcoming 363 sale, It's going to be a tough row to hoe trying to peddle the chinese assets' equity value as a basis for an official committee.
RIght now I don't see it happening."
Because of the VIE structure? So you are in agreement with Madaniels?
You and a couple others on the call were much more educated in these matters than me. Did you hear a explicit plan on how they were going to obtain value for the China assets, or is everything just exploratory? (have been trying to communicate to the firm that we need a plan, and to base it on examples of other BK cases; hopefully, their own experience)
Good to see you will be on the call, Darth.
No, I am not gathering comments prior to the call, nor setting up a conf call for investors before or after the call to discuss, nor contacting a 2nd law firm to get another opinion and/or a competing firm, nor…there are lots of things that could be done to improve our knowledge and position. Those items and more are for someone else to volunteer to set up or they will not get done. (Not directing this toward you, Darth)
However, I do have my own list of questions and will ask them during the call if someone else does not address them first. Also, there are experts on this board, like Finbar, that can probably answer some of these, or say that’s a stupid question, etc. Would welcome that kind of feedback since I do not want to waste anyone’s time. Hopefully, Finbar can participate on the call tomorrow, but not counting on it since he does not have a significant investment in AgFeed.
Questions: Were you able to find any large or institutional share holders? How are shareholders that don’t read the iHub/Yahoo msg boards made aware of our efforts? What happens to the class action lawsuits vs. AgFeed if there is money leftover for shareholders? If you are hired, what is the ongoing input from and reporting to shareholders? What is your expertise in dealing with China BK cases? With VIEs? What is your plan for ensuring shareholders are compensated for the assets in China? What is the approximate cost of a case like this? What if some shareholders don't want an EC and prefer to rely on the current mgmt/court system?
This last question leads to my layman’s reasoning on why hiring a law firm and forming an Equity Committee makes sense. Some have voiced an opinion that we don’t need legal rep – they will only reduce the amount of money (assuming there is any) distributed to shareholders – and our glorious CEO and the legal system will look out for our interest. I am unsure how the CEO is doing that at the BK proceedings. He’s not on the Creditor’s Comm, right? Has he got his own lawyer? How is he involved? He funneled…errr, paid $5M+ to lawyers and CPAs with no results (and this was his area of expertise?), then tried to deceive Hormel and sank our company…and for his encore??
Regardless – the reasoning that follows does not depend on Geithnerd:
As it now stands (again, this is my layman’s reasoning) the Creditors are getting paid with proceeds from the sale of the US assets and there will be little if anything left over for us. The creditors would like things to go smoothly – and have a vested interest in us NOT getting involved because it could delay and/or complicate things.
We have no real interest in getting involved UNLESS we can get compensation for the assets in China. Only then will the pool of money be significant and the share price go from 10 cents to 50 or even a dollar (wild guess here).
Enter a law firm, Elliot Greenleaf, with two lawyers and some financial advisers who have researched our case, and come to the conclusion that there “there are strong indicators that there may be a distribution to equity security holders.” They have done this research on their own, and if Finbar is correct about the standard billing arrangements, they will petition the court to form an EC at no cost to us. So far, we are out nothing. The law firm has done all this work with the hope/understanding that, if successful, they will get the business.
The judge will not allow the formation of an EC unless he/she believes there will be significant equity. Our law firm will argue why that is the case. I assume that would be totally contingent on China assets – if they are not or cannot be part of the proceedings, seems like everyone’s time is being wasted here. Seems like the judge could delay dissolution of the company until the China assets are sold, or, force the buyer into a package deal – again, imho. As Madaniels has pointed out, if the AgFeed corp structure disappears, good chance the China assets 'walk'. Seems like the judge may not want that to happen to shareholders.
I assume the Creditors Committee will present to the judge why China should be treated separately, or why we will never get a dime out of China, and why they need to move forward without an EC being formed. So….in the end – we just getting an answer to the question: is there a reasonable chance we get compensated for the assets in China? If yes, the judge allows the formation of the EC and we start to incur charges to what will ultimately be the funds dispersed to us (the leftovers). If, no, it costs us nothing. The law firm thought they had a case, but in the end there was no merit to it. No EC is formed, and we rely on our genius CEO.
Let’s look at some payoffs. Let’s say the judge grants the EC, law firm not able to ‘include’ China in the proceedings, there is $5M of equity after creditors paid off (from the sale of US assets), law firm charges $1M (again, I have no idea)….end result, you get 5 cents for your shares instead of 6 cents.
Alternate future – law firm is successful at making sure China assets sold for $50M, law firm takes $1M out…end result, you get 50 cents for your shares rather than 6.
EG Webinar, 7/29, 10 am ET - contact info
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Dear All:
Please be advised that the AGfeed webinar has been scheduled for Monday, July 29, 2013 at 10:00 a.m. EDT. Please use the following information to join the webinar:
Your Meeting URL www.anymeeting.com/rxza1
Dial-in No.: 213-416-1560
Participant Access Code: 724 9957
Please feel free to contact me with any questions.
Thank you!
Jennifer L. Ford
Elliott Greenleaf
(302) 384-9412
Heads up! Elliot Greenleaf (law firm) Webinar - Monday, 10 am ET
Purpose is to answer everyone's questions about the cost/benefits of forming an Equity Committee.
Will post contact info as soon as I receive - probably by end of day today.
One thing is for certain - you would be 10X better at communicating our issues than me.
Would you please buy enough shares to make this worth your time? ;)
Seriously though, I do appreciate your knowledge and direction. Probably going to wait one day to see if James calls back/post more info, and expecting a call back from the law firm I first made contact with: Elliot Greenleaf out of Wilmington, DE.
Yes there is.
I just left a message for James on his home phone. Thanked him for his initiative, identified myself by name and pseudonym on iHub and Yahoo and mentioned the discussion shareholders are having regarding having our rights looked after. I specifically asked if he considered an EC with his lawyer. Hopefully, he will call back, or better yet - make a public post on one of these boards.
We are indeed a bunch of cats...so far.
(probably better that not too many people call his home number, of course)
Another good find. Looks like we have someone in our corner. Can we assume that James considered trying to form an EC, but went with this motion instead? Or, could he be concurrently working with a law firm on an EC? So many shareholders - no organization or communication.
AgFeed Equity Committee - Finbar
Just posted this on the Yahoo board, but it looks like you prefer this site , so...
Thanks, MCF/finbar. That is some very helpful information. Obviously you have done this before. I have no experience in this area.
Seems like it would be wise to consult at least one other law firm anyway. If I understand you correctly, we should not have to put money up front if the law firm believes there will be sufficient assets for the shareholders, and the EC does not even go forward unless the judge believes the same.
If I understand the process, even though the debtor pays the legal fees, that money would be coming out of our pockets since it comes from the 'leftovers'. Do you agree with archstanton's comment (on the Yahoo board) that we would be better off doing nothing?
If not, what would you suggest next?
Nice to see this board lives, Jdews. Maybe it's a good sign that no one is interested in AgFeed right now...lots of potential buyers.
I was glad to see the confirmation on the timeline, but I must admit, I was even more happy to hear the rosey talk about taking care of shareholders.
CEOs are notorious for doing things like that just before the stuff hits the fan (Enron, Worldcom, etc.) - but a stock has to have some value in it and insiders and there banksters have to own a lot for CEOs to be motivated to lie like that (obviously so they can continue to unload shares as the company execs lie thru their teeth to the public...what a country)
Gothner has neither of those - the stock is already priced for bankruptcy and insiders own few shares. He has no reason to say something like that and then file for bankruptcy next month.
Given the lack of insider and institutional ownership, I thought there was a good chance the go the bankruptcy route and screw the retail shareholders. It APPEARS that is not going to be the case.
Wake up AgFeed investors! This looks like the confirmation we have been waiting for. CEO made a speech in China couple days ago and the transcript was just posted on the company website. Thought the key sentence was this:
"Our goal is to put this work behind us during September. With the hard work of restatement behind us, we can concentrate on rebuilding the faith and trust of our shareholders while we turn back to growing our business."
Not sure how he can file for bankruptcy next month after saying things like that.
Source:
http://www.agfeedinc.com/blog/quarterly_meeting
"You and i disagree where Feed would have been without the new management."
I like the credentials of the new mgmt; just don't want them to steal shares. They need to earn them or buy them on the open mkt. The pathetic $47K purchase by the CEO is cosmetic at best. That's it?!? No one bought more at 40 cents?!? That's the single scariest thing I know about FEED. Only way I can rationalize that it is not a problem is the mgmt intends to get their shares by other means. Which bring up the next issue.
"Without big insitutionals holders there is just no big dog guarding the companies value."
This is exactly my point. The big money IS INVOLVED and has an interest in keeping share price low so that FEED issues 2 - 3X as many shares as necessary. You think it is all about retail investors that don't understand FEED's business model or what business they are in, etc. and no 'big dog' to prevent it.
I have not researched those other companies. Only people without time and expertise would group all Chinese companies together - and those people don't tend to have much money - and therefore not influence the stock price.
We do know how AgFeed intends to make acquisitions and obtain capital. They told us in their last presentation. They intend to sell stock. I am suggesting that is a KEY reason this stock remains in the cellar. Everyone with any sense knows 60% of rev from US; they know pig price and exports to China are bullish indicators. There is something wrong here, and you keep attributing it to the lack of these well known trends that larger investors are well aware of. You need to look at the incentives of the mgmt and the big fish. They want the price low until they can dilute current shareholders at extremely low valuations.
If I am wrong, and they hold off, great! If I am right, I will be suing the people that benefit because it was a willful act to 'sell' shares of an extremely undervalued asset (FEED stock) for the assets of KCS and Pine which I assume will not be sold at fire sale valuations.
I really don't think you understand business or else you are a shrill for the company. What do you mean his joining the board is a good sign? The only good sign is if the deals at done with similar valuations based on P/S ratios or book values. It's NOT a good sign that someone joins a board when he is the owner of a company that stands to benefit by being bought out with undervalued stock.
And again, there is no synergy. Look up the word and tell me how it relates to pigs loaded on a truck at FEED and dropped off at KCS.
By delaying one year, FEED could get its stock price up by 3x or more. Their 'currency' would increase by 300%. You are cheerleading them on to do a deal know for one year of profits on packaging sausage. Do you get basic math? FEED would have to pay for the stream of those profits all at once - the company's NPV. It makes no sense to do it with undervalued currency!!!!!!!!!!!!!
You wrote: "Why would Kansas Saucage ceo join the board and be half of a two person investigation comission to check if china books are cleaned out now? To me that signals they want to go forward with the vertical integration"
Why do you believe this "vertical integration" is a positive? You do realize the 'integration' is pigs dropped off by truck at KCS and Pine so they can be cut up and packaged. No synergies - just extra cash flow on the profit.
The problem I have with it is that I think it is part of the problem with the share price. If FEED uses shares in the deal - either directly or to obtain financing from Southridge, their are interested parties with very deep pockets that want to see this share price depressed. In doing so, they will essentially transfer a large part of current shareholder assets to new owners.
Investors (with money) take the time to understand where FEED's revenues are coming from. They follow the price of pigs and corn as well as any developments regarding disease outbreak. It would be very surprising if FEED disappoints this qtr. Yet, the stock languishes and mgmt issues no press releases providing updates.
Of course, the KCS CEO wants to join the FEED board. Of course he wants his company bought with FEED stock trading at such a low valuation. Of course, he and other mgrs want to be issues stock options at low prices.
What I don't get is why you keep pushing the news of this 'integration'. NOTHING could be worse for current shareholders. I would bet the announcement that the 'integration' was on hold until AgFeed delivered a couple qtrs of good results would add 50 cents.
Thanks, RTN.
Correct me if I am wrong, but Southbridge is obligated to buy those shares if AgFeed delivers a "put notice."
---------------
THE OFFERING
On September 9, 2009 we entered into an equity credit agreement with Southridge. We may sell shares of our common stock to Southridge from time to time under the equity credit agreement for aggregate gross proceeds of up to $50,000,000. We have no obligation to sell any shares under the equity credit agreement. Any shares of our common stock we do sell under the equity credit agreement will be covered by a prospectus supplement specifying, among other things, the number of shares sold and the price per share.
We agreed in the equity credit agreement to issue to Southbridge warrants to purchase 400,000 shares of our common stock for a five year period at a purchase price of $5.75 per share. This prospectus supplement covers those warrants and the shares of common stock issuable upon exercise of those warrants.
The following is a brief summary of certain provisions of the equity credit agreement, does not purport to be complete, and is qualified by reference in its entirety by reference to the equity credit agreement which is filed as an exhibit to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 10, 2009.
Equity Credit Agreement
Terms of Sale
We may require Southridge to purchase shares of our common stock from time to time under the equity credit agreement by delivering a put notice specifying the total purchase price for the shares to be purchased (the "Investment Amount"). The Investment Amount may not be greater than the lesser of (a) $2,500,000 or (b) 300% of the average dollar volume (closing bid price times the volume on the Nasdaq Global Market for a trading day) for the 20 trading days preceding the put notice.
It was nice to see this list. As long as the move can be explained, it's easier to relax...and accumulate.
No. Ticker % Change Industry
1 GU -17.39 Chinese Burritos
2 SINA -15.00 Chinese Burritos
3 DATE -11.57 Chinese Burritos
4 VIT -10.60 Chinese Burritos
5 ASIA -10.05 Chinese Burritos
6 SPU -9.68 Chinese Burritos
7 DANG -9.10 Chinese Burritos
8 RENN -8.31 Chinese Burritos
9 CGA -8.21 Chinese Burritos
10 QIHU -7.68 Chinese Burritos
11 FEED -7.59 Chinese Burritos
12 HPJ -7.25 Chinese Burritos
13 ZNH -7.24 Chinese Burritos
14 OINK -7.04 Chinese Burritos
15 CIS -5.84 Chinese Burritos
http://ibankcoin.com/news/2011/09/20/lol-at-15-chinese-burrito-stocks-that-were-cruuuushed-today/?utm_source=wordtwit&utm_medium=social&utm_campaign=wordtwit