I wanted to respond to your post about the
convertible. I think there is still some misunderstandin about
how this works, and I think I did a poor job
explaining it before, so I want to take another crack at
First though, there's been a lot of talk about dilution
and shareholders ability to vote once this gets to
15% as a means of protecting us. I think this is
terribly misguided. RGC need never convert a share to kill
OE. Remember that, because its very, very
Here's the scenario (one scenario-there are infinite
variations). Before Feb. 15, RGC can use their ability to
convet at $4.50 to sell short without a capital outlay:
they just use the warrants as collateral. So without
spending a penny, they short say 10,000 shares at 3.25.
Now given OE's low volume, this sale is probably
enough to drive the price down some. Now they can either
short some more, further driving down the price, or
just put up a big block (for which there is likely no
buyer-and still using the converible as collateral)for
sale, capping the price or driving it down. Now they do
this little dance for a while, forcing the price
Now, you might say, what if DB suddenly announces a
deal and the price shoots to $8. No problem, they just
exercise their warrants and sell them at $8. So they
bought 10,000 @ $3.25 ($32,500) which they cover at
$4.50 ($45,000) and sell those right quick at $8
($80,000). So they lose $12,500 on the short, but make
$80,000 on the long for a cool profit of $67,500. See how
easy that was? And with *ZERO* risk.
no anouncement they could continue to short and
cover. A short at $3.25 covered at $2.50 is about a 25%
return. That's $75 THOUSAND on every 100,000 shares they
short. And under this scenario (no announcement) they've
driven the price down 25% WITHOUT buying a share. No
dilution. No vote. No risk. big return.
where it gets really insidious: After February 15, they
have the right to buy at the average of the lowest
three days price. So the little risk they HAD (in the
example above, the difference between the short price
($3.25) and the warrant price ($4.50) disappears
entirely. So what tiny, tiny, tiny incentive they might
have had to go long only is wiped out.
no risk to this scenario. NONE. NADA. There is (as
we've all seen) TONS of risk of going long.
Why? Why? WHY would RGC choose to go
They wouldn't. And they won't. It's not unjust. It's
OE has to close out this deal
before it kills us.
It's not an issue because the methodolgy does
work, however, central injection has been optimized by
Orbital's engineer. Side injection needs to progress in a
similar manner. Each customer's engine is different.
Eventhough we are dealing with the basic 4 stroke concept,
every engine design is different and requires its
components to accomodate the new methodology of delivering
fuel to the combustion chamber. According to Ken
Johnson, he was positive that the same results can be
obtained with side injection as with central injection but
additional engineering work was needed to optimize the
results. It's my opinion that this was not done or minimal
effort was expended in an accelerated schedule that a
complete optimization was not achieved. This probably
influenced DCX to determine that OCP side injection was not
competitive compared HPDI and additional work was required.
This is pure speculation on my part. But from my
experience I found many companies who come to market with a
product that cannot compete and hoping that the consumer
will be accomodative for you to improve the results is
not realistic. This is asking for major trouble and
cause for failure of your product line to win
signifcant market share. Its better to be late and if your
competition is having similar issues to contend with, you
ought to wait and use the time to enhance the product's
The "unfinished" state of side-injection
should not weaken OE's relationship. I believe the OCP
concept to fuel IC engines, in this case gasoline, is
basically sound and has been proven in the retail market to
work. It's accomodating the new technology into
existing platforms that is the challenge and that
challenge is equal to all who wish to employ DFI, high or
low pressure. Otherwise they would need to design new
engines which require more time and money.
If it's any consolation, I've never had a reply
to my e-mails either.
I can say, my phone calls
to 'Investor Relations' has always been answered in
a polite and professional manner. I don't think
they have the resources to respond to everyone's
Can't say more than that
Haven't been able to read the board all day, so
this response is inregards to some messages posted
George, when I first saw your post about the board
meeting and I asked where did you here it from, the next
thing I did was e-mail the company. Now, I've e-mailed
the company twice before and have never received a
reply, so I was really expecting one this time either
(and, of course, I never got one).
<<The company's lawyers have dictated that officers
should not respond to shareholders in writing. Rest
assured your e-mail along with others is receiving
First of all, what kind of company will not respond to
its own shareholders in writing? What are they so
afraid of? Do they think that they have made misleading
(illigeal) statements in the past and the attorney's are now
trying to prevent it from happening again? Why, why, why
would you advise your client to not respond to the
owners of the company?
And yet . .
<<Dear Mr. Renneberg
Thank you for comments on the
issue of the convertable notes. I know all the
directors are very mindful of their duty to represent the
interest of the Shareholders to the best of its ability. I
will undertake to ensure that your views on the
convertable notes will be considered fully during management
and Board deliberations on this and related
. . .
renneber received a reply. I'm assuming, but I think I am
correct, that renneber must have e-mailed OE after me and
I'm sure others. No one else that I know of received
a reply (BTW, renneber, I'm NOT accusing you of
anything, just pointing out that you ACTUALLY received a
It seems obvious to me, that OE does reply to
e-mails and in writing. However, there must be some
secret qualifications to actually get a reply. I've
owned OE for close to 3 years now, but if I owned it
for one day, the company should respond to a
Day by day, I lose more respect for the management of
this company. Oh, I know . . . they are signing deals,
but it is hard for me to invest in a company that
treat their shareholders so shabbly, in contempt, and
as the advesary.
Do they grasp what they are
doing? Do they comprehend that for all of their
wonderful technology, that if they alienate their own
shareholders, why do they think company's might question if
they should do business with them? I could go on, but
now I'm just venting. George, didn't really mean to
direct this at just you, but like I said just
I'm not doubting your veracity, but that is about
the strangest thing I have ever heard.
routinely request information from companies, either by
letter or email, and it is rare indeed that a request go
I would certainly never invest in a company that
can't be bothered to respond to such
Now I realize this is a little different, but it
appears to me that Maverick has gotten ample resonse from
OE, and someone else posted today or yesterday the
text of a response they got from OE to their statement
So what's going on here? I stand by
my comment, it is grossly unprofessional not to
respond to shareholders. Period. I did not solicit any
information, only an acknowledgement that they got my email.
If I'm going to take the time and effort to meet
what I feel are my obligations as a shareholder (to
voice an opinion on important issues, right or wrong),
they can AT LEAST acknowledge it. I gotta tell you I'm
really, really pissed off. Its just so
Getting off the subject, it seems to me that if OE
decides to redeem the convertible, you will hear NOTHING
tomorrow. If the board votes to redeem, then they will need
some time to arrange alternative financing. In the
mean time, if they tip their hat that they've made
this decision, RGC will just short the hell out of the
stock from then until the redemption is
I would bet all my approaching-worthless OE stock
that they do not redeem the convertible. I haven't
seen them make ONE sound finance/market related
decision in all the time I've been an investor. Except the
DMG deal. But their track record still stinks.
And yes, all of this doe make me feel like an idiot
for continuing to hold. But hope springs
A couple years ago a campaign was raised against
RJR Nabisco to force management to spin of the
Nabisco unit to shareholders. Two men who held 10 - 15%
of the company had this added to the proxy statement
and it was put up to a vote by the
Can this sort of action be taken against Australian
companies? Can Australian companies be sued by shareholders?
It seems like their is a new lawsuit by shareholders
of U.S companies every week.
I would like to ask you, is the reaction in your
If for instance, the convertible is
not retired, the share price in Australia will suffer
very badly. It is almost down to its 1984 issue price
I think it would be better to confine your
frustration�s to the central theme, the convertible.
can understand the company better when you're armed
with the right knowledge.
1. The company's
lawyers have dictated that officers should not respond to
shareholders in writing. Rest assured your e-mail along with
others is receiving attention.
2. The company has
a highly motivated workforce and conducts its
business in a professional manner.
3. The deals
announced todate is the result of hard work by its staff
and engineers, often separated from family and
friends for long periods of time in foreign
I have nothing but admiration for the company in
its endeavours to secure deals in a very difficult
market environment. If the Asian crises never happened
we would now be seeing 2 stroke auto's going into
Now the convertible: I was informed by my
Stockbroker that no matter how many deals Orbital secured the
share price will always be in jeopardy because of the
way companies like RGC operate. Ruthless is the
correct word. Management have shifted the level of risk
from the company to shareholders. The company can
continue to operate as a going concern, it's just that
shareholders are faced with an unnecessary risk.
THE CONVERTIBLE ASAP.
I sent OE an email four days ago, along with the
rest of you, and received no reply. Now I realize it
normally takes *WEEKS* to get an email ready to send. I
mean, it's just so ARDUOUS to say, "thanks for your
comment, we'll take it under consideration."
*WELL* run company OE is. Right on the ball.
That's just bullsh*t. You don't treat your investors
Am I supposed to believe they treat
their customers any better?
Maybe Ford sent
them an e-mail a couple of years ago wanting to go
into production, and they just couldn't be *BOTHERED*
to open it.
They are just SO BUSY giving away
this company to RGC that they can't be bothered
talking to their shareholders.
I just can't
believe I gave my good money to these
Thanks for nothing, OE. AGAIN.