Elite Pharmaceuticals Inc (ELTP)

[WeeZuhl]

Novel = Privately-Held Corporation = Epic

I have a hard time understanding how some can have a What’s Done Is Done attitude toward what appears to be $40+ million underpayment. That amount would cover the entire LPC I Deal. Yes, maybe there is not much to be done about it now, but how do we know the exact same thing is not happening again right now with Epic? I have previously discussed the Novel deal in the context of Nasrat Hakim’s cozy relationship with Epic and my concern about an Epic-Elite merger. The following post is from April, long before the Epic ELI-200 deal. Elite shareholders do not know any details of the ELI-200 deal, and likewise, the nature of Nasrat Hakim’s Epic membership still has not been publicly disclosed. And further, if NH was cooking up the ELI-200 deal with Epic, including Epic retroactively paying the development costs, why not make the same deal months ago with the development money up front and prevent much of the LPC dilution and the need to accept pennies on the dollar for Novel?

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=113217587

There was quite a bit of speculation prior to the announcement that the Novel payout would be in the range of tens of millions. But Novel being a private company with closed books, it was all speculation, and in the end, it was not even close. Shareholders never saw any details, and we have to trust that we were properly compensated for our stake. The final deal was probably hammered out by the two principles over a fancy dinner and a bottle of fine wine. I'm certain that many extrinsic factors were considered beyond valuation, including quick payout and avoidance of litigation. My suspicion is that we probably got less than we deserved (but not a lot less). My point is that our stake was worth what the big players privately decided it was worth and only somewhat based on "valuation".

Now let's say we enter into a merger with a similar privately held corporation. Epic's books are closed to ELTP shareholders, but ELTP's books are wide open. And not only that, but the Directors of each entity are so incestuous that whatever the big players privately decide will surely be approved by both BOD's. If we entered into some type of merger next week, Epic's valuation based on current revenues would dwarf ELTP's, and the merger would go down 9:1 with ELTP shareholders being diluted out 10 fold. But we all hold ELTP shares because we think revenues will increase by hundereds of multiples over the next 10 years. By 2025, the revenue asymmetry would be reversed, and it would be Epic shareholders enjoying the dividends of ADF revenues. Why would Nasrat Hakim go for any such deal? Well, I don't know what his deal is with Epic, does anybody?

And by the way, who says such a merged company would be a publicly-traded company? Why couldn't the two BOD's agree to merge and go private. Pay off ELTP shareholders at a premium price of 0.30? How disappointing would that be?