Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
(b) On December 1, 2008, David G. Maffucci was elected a director of Xerium Technologies, Inc. (the “Company”). In 2008-2009, the Company faced unprecedented challenges regarding its debt structure and a difficult economic environment. During that time, the Board of Directors approached Mr. Maffucci to assume the role of Executive Vice President and Chief Financial Officer. He agreed to take on such additional responsibilities and on May 27, 2009 he assumed that position. For the last year he was instrumental to the Company’s efforts to restructure its debt and reposition the Company for the future. The Company successfully completed its restructuring initiative through a pre-packaged bankruptcy in May of this year, at which time Mr. Maffucci stepped down from the Board.
On June 30, 2010, Mr. Maffucci announced his resignation as Executive Vice President and Chief Financial Officer, which is expected to become effective at the end of August of this year. The Company is pursuing a national search to fill the position.
"It should be trading at no more then 20% of current share price, which would give it a fair value of $2.50 range." >>frtgrdn21
Given time, that 2.50 might appear on the ask side. Best ask dropped to 3.75 today from 4.00 previously. Bid still sitting at 1.30 but no takers on either side since yesterday.
With risk free interest changed to 1%, calculated warrant value is $4.87 with Delta of 0.63. If the stock volatility declines, both those values will drop further.
My spreadsheet actually kicked out a $5 value at the close today with the lower price and slightly decreased stock volatility, but I had the risk free interest at 2%.
It seemed weird that lower risk free interest would decrease the value of the warrants, so I went back to the formula again to understand it better. Turns out the formula calculates the difference between the expected benefit of acquiring the stock outright and the "current value" of paying the exercise price on expiration day.
In essence it assumes you keep the cash for exercise locked up and growing for the full term after purchasing the warrant. Lower compounded interest means more initial cash must be set aside - makes sense. So I have switched to 1% to be conservative.
Math makes me high. Always has. Deconstructing a complex function like this is almost as satisfying as deriving one. It's a geek thing.
It doesn't make sense to buy a warrant at $4 when the share price is at $12.50. Only an Idiot would bite on something like that, even if the warrant expires in 4 years. It should be trading at no more then 20% of current share price, which would give it a fair value of $2.50 range.
One more: Maybe I should look and think before I post. Sorry for the rambling anxiety folks. I would blame the heat (100 today with 103 forecast tomorrow) but that probably wouldn't fool anyone.
I have two other overleveraged, recently reorganized, microcap stocks that also got slaughtered today. RUTH was down 11.27% and ZQK down 8.64%. With XRM, these were BY FAR my worst performers.
Restaurant, Retail, and Manufacturing but two had the misfortune of large aquisitions just before the recession and all have been and remain highly leveraged even after restructuring.
So maybe the price action on XRM today was just a coincidence. Thursday and Friday still have me wondering - ZQK and RUTH both rose though the broad markets were down.
Wow, .61 pre-split. Should have sold out the rest at $1.30. Oh well, riding the profits into the dirt. I have some money freeing up and might actually load up again if it falls below $10. Any idea when the debt holders that converted can start unloading their shares in the open market?
Putting aside what Maffucci's resignation might say about him or the mood in the executive suite, the recent declines are very suspicious.
Maffucci announced his resignation last Wednesday, 6/30. The big volume selling started on Thursday - same day as NYSE PR. I can't help but think the two things are related! As ptcgolf said, "someone has been on a mission". I would love to know who it is.
Gonna have to think on this. As appealing as the share price looks, I think I'll just watch. Comfort or clarity needed.
I think you need to go on a message board diet. There is no conspiracy here with the share price, just as there was no conspiracy when it was at $14+ last week. Next week it can go to $16 for no reason.
The float is small here a little selling, or buying for that matter, has a large effect on the price. Some fund has decided to dump for whatever reason today. It's not alot of shares or money here, relatively speaking. I wouldn't really pay attention to it.
As for the CFO, it's not a big deal. The guy helped them thru the bankrupcty. He's no superstar operating CFO. He did his job restructuring the company and now he's probably looking for a new gig. Doesn't have anything to do with the prospects of XRM.