HOM- Dick...According to HOM's own PR, they paid a 7% commission for the private placement. I'm not sure what the average commission is but I'll take your word that it is 7% (not including the warrants for 125,000 shares that the firm was also given). But, the offering was announced before the market opened on 11/23/05. The previous day, HOM had closed at $6.60, so those investors also bought the stock at a near 17% discount plus they recieved a free warrant to buy another .2 shares at that discounted price. Looking at the list of investors who bought stock many were employees or family of employees of Sanders, Morris and Harris. There were a bunch of funds (how many of those are hedge funds?)on the list as well. No doubt they were clients of Sanders. It's all in the filing for anyone who is interested.
Bottom line, the placement cost HOM and its stockholders much more than 7%. I also agree with you about the lack of value in a recommendation from a firm whose bread is buttered by the company it follows. I have one word for investment bankers like Sanders: GRRRR!!!
Here's HOM's PR from then:
The offering consists of 4,850,000 units at a purchase price of $5.50 per unit, with each unit consisting of one (1) share of common stock and a purchase warrant exercisable for a 0.20 share of common stock. If the offering closes, the company will issue to the investors, an aggregate 4,850,000 shares of common stock and warrants exercisable for an aggregate 970,000 shares of common stock. The warrants, if issued, will be exercisable immediately, have a five-year term, and have an exercise price of $5.50 per share. In addition, the company will issue to the placement agent, Sanders Morris Harris Inc., warrants exercisable for 125,000 shares of common stock. The placement agent warrants, if issued, will be exercisable immediately, have a five-year term, and have an exercise price of $5.50 per share. In addition, the placement agent will receive a fee equal to 7% of the gross proceeds of the offering.
AI
