| To: vagabond who wrote (14) | 12/6/1999 11:06:00 PM | | From: vagabond | of 21 | | |
A CRITICAL WARNING to anyone who bought PLEX shares after July 1998, and held them through the ETRV merger/reverse-split. If you've already sold the "converted" ETRV shares, you COULD face serious problems -- including suddenly being told by your broker that you're "short" the shares you thought you'd sold.
Likewise, anyone PLANNING to sell "converted" shares may want to WAIT until things are clarified. The problem with that, of course, is that the share-price may fall in the meantime and you could lose money. But at least you won't risk find yourself "short." Those relative-risks are things you'll have to weigh for yourself.
Before getting into the whole story, let me point out here (rather than making you wade through all this first) that the basic information below can be confirmed by contacting Stephanie Abrams at ETRV "Investor Relations" -- (201) 567-8500. She will further advise you that ETRV has now asked NASDAQ to step-in and resolve the situation, in a way that works to the best advantage of share-holders. She says several groups of lawyers (from ETRV, NASDAQ, other agencies) are now involved in the matter, but it's not clear yet how long it will take to sort-out.
Okay, so here's the situation (and I'm sorry this post is so long, but it's a VERY complicated matter)...
There is now confusion over just how the PLEX shares should have been converted to ETRV shares during the merger/reverse-split process, because it turns out that PLEX officials claim to have done a previous 20-to-1 reverse-split (R-S) back in July 1998, when they were selling off the assets of the original company and making it into a "shell" as they looked for merger/acquisition possibilities.
The problem is, this alleged '98 R-S was apparently never reported either to PLEX's transfer-agent or to securities-agencies -- and there doesn't seem to be any record of the share-price or number of outstanding shares being "adjusted" to reflect that split. I don't know for sure if this was deliberate deception, or simply the worst record-keeping in the world. But either way, it's turned the whole PLEX-ETRV deal into a mess.
This issue has only NOW come-to-light, raising questions as to how the PLEX-to-ETRV share-conversion should have been calculated -- basically, whether the shares of PLEX that people bought after July '98 were "pre-split" or "post-split," PRIOR to the 36-to-1 reverse-split involved in the PLEX-ETRV merger.
I know this is hard to follow -- but the bottom line is that there's now a dispute over how many ETRV shares should actually have been given to former PLEX share-holders. If, for example (just to use easy-to-figure numbers), you'd held 36,000 shares of PLEX you probably found a "converted" total of 1,000 shares of ETRV in your brokerage account after the merger and symbol-change (reflecting the 36-to-1 R-S called-for in the merger deal). But because of the new confusion over the alleged July '98 R-S, that calculation may have been wrong -- and if you've already SOLD the 1,000 shares of ETRV that you thought you had, you may soon receive an e-mail or letter from your broker telling you that you actually sold shares you didn't own.
I know -- I just got such a notification, more than a MONTH after I sold the converted ETRV shares that had been reported in my account. And I've now heard of other people who've received similar notices.
Fortunately, my broker has agreed not to take any action (such as requiring me to re-purchase the shares I may have "sold short,", or make other "restitution") until this whole mess is ironed-out. But in the meantime, it's hanging over my head -- and you could be in the same boat, if you sold converted shares too (in which case, I hope YOUR broker is also patient). Obviously, if necessary my final-defense will be that I only sold what the broker told me I had in the account -- and that if the broker/transfer-agent screwed-up, I shouldn't be left holding the bag. But of course, I'd much rather not see things even reach the point where I have to make that argument...
Ms. Abrams indicates that ETRV management seems to have been "bushwhacked" by this complication just like everyone else -- that whatever happened was the fault of the former PLEX management, and that ETRV didn't know anything was wrong its OWN transfer-agent began looking at the stock's history and discovered the possible problem.
The only "positive" element in all this seems to be that because ETRV itself could be severely-affected by all this, its own attorneys are taking the lead in trying to clarify and resolve the situation -- and chances are that ETRV's interests coincide with the interests of share-holders, since it doesn't want to see the merger-conversion called into question. So I assume/hope that they will be pushing for a resolution that will also benefit all affected share-holders (the best outcome I can imagine is that NASDAQ and/or the SEC would simply declare that the alleged July '98 reverse-split had no legal-standing, and "never happened" -- which would leave the PLEX-ETRV conversion un-affected).
And that's all I know. Not a pretty picture, but something all past or present share-holders need to be aware of. And if anybody else digs up further information of value, I hope they'll pass it along.
Good Luck to us all...
Vagabond |
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