Sirius has scheduled its annual shareholders' meeting for December 18, and has filed an agenda with four items: the re-election of the board of directors; approval of an amendment in the certificate of incorporation to increase the number of authorized shares of stock; approval of a reverse stock split; and ratification of the appointment of KPMG as accountant.
This is the meeting that Hartleib and allies hope to have postponed.
I've done some quick research on the lawsuit mentioned in Mr. Hartleib's recent press release. It appears he actually filed it months ago, in July, when the precursor company defendant was still known as Sirius Satellite Radio Inc.
The original complaint charged, (and I emphasize, I'm only conveying an accusation, one made as a matter of public record, and I don't intend thereby to give it any cerdence): "Upon information and belief, Sirius and XM did develop an interoperable radio, but based on claims that it could not be marketed commercially, never made the radios available to the satellite radio using public."
The plan to merge the two companies developed, the complaint says, as a way of avoiding the competition that interoperability would have made necessary.
At the end of that month, the merger closed.
In September the defendant moved to dismiss the case, arguing as follows: "Basically, Plaintiff, a private citizen, seeks through this action to substitute his own judgment for that of the Federal Communications Commission and the Antitrust Division of the United States Department of Justice, both of which conducted comprehensive reviews of the proposed merger and its competitive effects over many months -- and approved it."
The court granted the motion to dismiss, but in doing so gave the plaintiff leave to amend -- i.e. until October 27 to file an amended complaint that might cure the defects of the first effort.
So the plaintiff filed his amended complaint on time. This one focuses on the merger as a breach of fiduciary obligation. "The Board and officers of Sirius ... grossly mismanaged its operations by engaging in reckless financing of the merger [ignoring] warning signs that the merger ... would severely damage Sirius Satellite Radio Inc." The complaint notes that shares of Sirius traded at about $2 a share before the merger, and have since (as of late October) fallen to 29 cents per share.
The defendant has again, as of yesterday, Nov. 17. moved to dismiss. In its motion, it says thst the sort of charge I just quoted is a conclusory allegation "without particularized facts about the individual directors' supposed conflicts. Likewise, hartleib carelessly accuses the Board of misconduct ... without identifying specific wrongdoing by any particular member."
That's where matters stand as to the lawsuit. My guess (which is only a guiess) is that Hartleib himself is concerned that things aren't going his way, that the defendants may win this one as well. If so, then it makes sense that Hartleib would go public with a press release just as the defense is making its second motion to dismiss -- appealing over the heads of the judge to the public and the shareholders, so to speak.
Showing posts with label reverse stock split. Show all posts
Showing posts with label reverse stock split. Show all posts
Tuesday, November 18, 2008
Monday, November 17, 2008
Sirius XM
Michael Hartleib believes that the management of Sirius XM has been unjustly enriching itself at the expense of its shareholders.
This raises the question: "Who is Michael Hartleib?" Other than the fact that he's the subject in the lead sentence above, I can't find that he "is" anybody whose name most of us should recognize.
Still, he has taken two actions worthy of note in this place. He has created a group called SaveSirius with the idea of waging a proxy fight, and he has filed a derivatives lawsuit in a federal court in California.
SaveSirius has sent formal letters of demand to the SIRIUS XM directors. It demands, specifically:
* postponement of the vote that is seeking shareholder approval to further dilute the common stock by increasing the number of shares in the fully diluted float from 4.5 billion to 8 billion.
* postponement of the proposed reverse split, ranging from 1 for 10 to 1 for 50.
* immediate suspension of all stock compensation plans and other bonuses.
This raises the question: "Who is Michael Hartleib?" Other than the fact that he's the subject in the lead sentence above, I can't find that he "is" anybody whose name most of us should recognize.
Still, he has taken two actions worthy of note in this place. He has created a group called SaveSirius with the idea of waging a proxy fight, and he has filed a derivatives lawsuit in a federal court in California.
SaveSirius has sent formal letters of demand to the SIRIUS XM directors. It demands, specifically:
* postponement of the vote that is seeking shareholder approval to further dilute the common stock by increasing the number of shares in the fully diluted float from 4.5 billion to 8 billion.
* postponement of the proposed reverse split, ranging from 1 for 10 to 1 for 50.
* immediate suspension of all stock compensation plans and other bonuses.
Wednesday, June 18, 2008
Reverse Stock Split
Tomorrow, Biotech firm Cell Therapeutics Inc. will hold a shareholders' meeting in Seattle, Wash., at 10 AM local time, to elect directors to its board, approve a reverse stock split, and conduct other business.
It doesn't appear that there will be any fireworks at this meeting, but I'm intrigued by the company's dual listing -- it is listed both on Nasdaq and on the MTA, the Italian stock exchanged headquartered in Milan. [For those who need to know what initials stand for in any language, the MTA is the Mercato Telematico Azionario.]
Looking at the Nasdaq one-year chart, I have to say: it isn't a pretty sight. A share of CTIC was worth $3.50 a year ago. It had a brief upward move to $5 in mid-July 2007. But it has been steadily downhill ever since, and at close of business yesterday that share was fetching just $0.52.
Hence the "reverse stock split," a strange expression but one to which the business world seems accustomed. I've always wondered, "why not call it a stock meld?" or some other word with a meaning antithetical to "split"? If a company has a stock split, and I own two shares, then tomorrow I'll own four. Presumably if nothing else changes in the meantime the price of a share of that stock will be cut in half by the split, too. If my company has a stock meld (aka a reverse split) and I own two shares, then tomorrow I'll own just one share, presumably of twice the market value.
This is a matter of cosmetics, but a share price of $1.04 looks better to many observers than a share price of $0.52.
It doesn't go that smoothly for everybody. As the proxy materials warn, the reduction in the number of shares will increase the number of shareholders who hold less than a “round lot,” or 100 shares. Typically, the transaction costs to shareholders selling “odd lots” are higher on a per share basis, so somebody is going to get hosed for this cosmetic improvement.
And it still sounds like a strange expression.
It doesn't appear that there will be any fireworks at this meeting, but I'm intrigued by the company's dual listing -- it is listed both on Nasdaq and on the MTA, the Italian stock exchanged headquartered in Milan. [For those who need to know what initials stand for in any language, the MTA is the Mercato Telematico Azionario.]
Looking at the Nasdaq one-year chart, I have to say: it isn't a pretty sight. A share of CTIC was worth $3.50 a year ago. It had a brief upward move to $5 in mid-July 2007. But it has been steadily downhill ever since, and at close of business yesterday that share was fetching just $0.52.
Hence the "reverse stock split," a strange expression but one to which the business world seems accustomed. I've always wondered, "why not call it a stock meld?" or some other word with a meaning antithetical to "split"? If a company has a stock split, and I own two shares, then tomorrow I'll own four. Presumably if nothing else changes in the meantime the price of a share of that stock will be cut in half by the split, too. If my company has a stock meld (aka a reverse split) and I own two shares, then tomorrow I'll own just one share, presumably of twice the market value.
This is a matter of cosmetics, but a share price of $1.04 looks better to many observers than a share price of $0.52.
It doesn't go that smoothly for everybody. As the proxy materials warn, the reduction in the number of shares will increase the number of shareholders who hold less than a “round lot,” or 100 shares. Typically, the transaction costs to shareholders selling “odd lots” are higher on a per share basis, so somebody is going to get hosed for this cosmetic improvement.
And it still sounds like a strange expression.
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