Taking Control of the Short Sellers by GENI....
GenesisIntermedia Issues Letter to Shareholders
LOS ANGELES--(BUSINESS WIRE)--April 25, 2001--
GenesisIntermedia.com Inc. (Nasdaq/NM: GENI - news; Frankfurt: GIA) today announced that it has issued the following letter to its shareholders:
Dear Fellow GENI stockholder:
It is my pleasure to report to you that we are continuing to implement strategies to grow Centerlinq, Car Rental Direct and Genesis Media Group, as well as identify new opportunities for expansion. We envision growing the company's operations, thus increasing shareholder value, through capitalizing on acquisition opportunities and through the continued practice of entering into strategic alliances and joint ventures that help gain market share, new resources and expanded competencies for GENI and subsidiaries.
We want to be able to continue to provide you with a healthy share price. We believe the best way to do this is by following through with our initiatives to build Centerlinq, Car Rental Direct, Genesis Media Group and future acquisitions. Recent cash infusions into GENI and our subsidiaries will be used for this purpose.
I would also like to thank both our individual and institutional investors for your continued support of GENI. Companies like ours that are striving to create value for their shareholders, and for consumers and the business community, need to stay focused on long-term vision in order to achieve their goals. Lately, there have been a number of companies that have had to turn part of their attention away from growth strategies in order to combat increasingly heavy pressure from ``short selling.''
In our case, according to reports published by Bloomberg L.P., out of 21 million GENI shares outstanding, there was a total short position of approximately 4.6 million shares. That is why we are asking for your help.
The Short Selling Process and Its Effects
One thing to remember about short selling; those who are doing it do NOT own the stock. Short sellers are not aligned with the interests of the company or of its shareholders. They borrow your stock from your broker, and need to return it at a later date. If the stock price goes down, the short sellers then buy stock in the market at the lower price, and return the stock they borrowed from the broker -- that's how the short sellers make a profit.
By selling first and buying later, short sellers benefit from stock prices going down instead of up. This makes their interest in our company directly opposite from what most of our stockholders want -- i.e. for the price to go up. We are all working toward increased share price, while short sellers are looking for a decrease. If there is a lot of short selling, the supply of our shares may exceed demand for our shares, causing the stock price to go down. Short sellers bet on that. In effect, short sellers could make money by selling enough stock short to artificially increase the volume of selling, which then drives down the market price.
Short Sellers Borrow The Stock From You
Short sellers borrow the stock from shareholders, whether or not the shareholders are aware of it. If your shares are registered in your broker's name (commonly referred to as ``street name'') instead of your name, or if your shares are held in a margin account, your broker might have loaned your shares of GENI or other investment to the short sellers. When shares are held in street name, the broker is the legal owner of record and can loan your stock to anyone without your permission.
Many companies currently in the marketplace are experiencing a high volume of short selling. Unfortunately, we are no exception. The amount of short selling compared to the trading volume in our stock is unusually high. A large short position, like the one that currently exists for GENI stock, has the ability to significantly push down the price of a stock.
Taking Control of the Short Sellers
Short sales occur when traders borrow stock from brokers that is either registered in ``street name'' or held in margin accounts. The less the inventory of stock held in street name and margin accounts, the less shares available to borrow, thus reducing the likelihood of short selling. If enough stock is taken out of street name and margin accounts, short sellers will have difficulty maintaining the current volume of short sales. As fellow GENI shareholders, we are asking that you help secure your investment.
Contact your broker and have your shares taken out of street name or put into a cash account. Your ability to deal with your investment as you want does not change. You still own the stock, and you still make decisions regarding your investment. The only change would be that your shares would not be held in your broker's name anymore, and they would be in a cash account.
By doing this, a short seller would not be able to borrow your stock for short sales without your permission. Also, when your stock is held in a margin account, brokers can loan it out. Transferring your shares into a cash account is an easy way to safeguard your investment.
There is no disadvantage for stockholders who have their investments registered in their own names or held in cash accounts. There will possibly be some administrative functions that you would need to carry out to effect this change, such as paperwork and nominal charges in conjunction with re-registering or moving your shares. When you want to sell, you would have to send your broker instructions to move the stock back into street name or into a margin account, and the broker may ask you to sign some transfer documents. Overall, though, it is a small price to pay for relieving the heavy short selling pressure on the stock that you own.
We're asking our shareholder base to respond immediately. Short selling works to all shareholders' detriment, and we would like to see an immediate reduction in the short selling pressure on GENI stock. We intend to work with our transfer agent and participating brokers to make the process of re-registering your shares or moving them into cash accounts now as quick and easy as practicable. If you have any questions about this process, please call Robert Bleckman at GenesisIntermedia, 818/902-4397, for assistance.
Again, we are looking forward to maintaining our shareholders as partners in growth. We greatly appreciate your support and your belief in us as we build a company that creates value for shareholders and value for consumers and business.
Sincerely,
Ramy El-Batrawi
Chairman and CEO
This document contains certain forward-looking statements that are subject to risks and uncertainties. For such statements, GenesisIntermedia.com claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors discussed in GenesisIntermedia.com's Annual Report on Form 10(K) for the year ended December 31, 2000 filed with the Securities and Exchange Commission. The contents herein shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state or jurisdiction.
--------------------------------------------------------------------------------
Contact:
GenesisIntermedia.com Inc.
Robert Bleckman, 818/902-4397
robertb@genesisintermedia.com
AI
