I saw VG or another shareholder mention Jacob, the IR person for this company. I'm wondering if anyone contacted him.
Down another 40 cents. I just can't believe it. Wish I knew why. Like others, the company seemingly is better and stronger now than ever. So why the ass-kicking now?
The complete text of the Aquisition agreement is available as EX-10.1 2 pacificnet_8k-ex1001.htm EXHIBIT 10.1
I have read that agreement in detail and in my humble opinion there is no single clause that allows you to assume Octavian could get more shares if the price of PACT is lower then a certain tershold value before or after completion of the agreement.
There was only one clause 3.3.3 that allowed Octavion to refrain from the deal: "In the event that the volume weighted average price of the PACT Shares daily in the period of seven days up to (but not including) the Completion Date falls below $5, the Seller shall have the option not to complete this Agreement in which event he shall notify the Purchaser in writing upon which the Escrow Shares shall be returned to Purchaser and this Agreement shall cease to have effect immediately (but without prejudice to the parties accrued rights and liabilities under this Agreement at the time it ceases to have effect)."
In the meantime we already reached "Completion date" which was on 23 January, and consequently the above clause is now irrelevant.
So I see no ground for Octavian to do the shorting.
In the opposite, Octavian has to financially perform if they want to be paid out the cash ammount that comes with the deal. Performance as such will be according interpretation of Kabani. There is a good protection clause for PACT.
I don't believe Octavian has any reason to do the shorting.
Oct shorting is my assumption.
But if you are right about <<agreement includes a clause that final number of shares is dependant on the average share price between time A and B>> then it most probably is Oct shorting. I think there is a future earnout date for the final reconciliation. "Completed" means that the paperwork for the buyout is finished and signed. It doesn't mean that all cash and shares have been released.
Oct shorts against the pledged shares and drives the price down. Thus they get more shares. They use the additionnal shares to cover their shorts and end up with free money. This is truly a printing press.
When this technique is used during a financing, it's referred to as "death spiral" financing. Since the SEC eliminated the uptick rule and the DTC doesn't enfore naked shorting, this is truly a gold mine. Most companies now put a clause in the buyout paperwork to prevent the sellers from shorting against the pledged shares. I don't think the Tongs are good enough businessmen to have included this clause.
Vegas, would you mind to elaborate a bit on "It's Octavian shorting"? Is this your assumption or is it a confirmed guess?
Basically PAC issued 2330000 restricted shares for this deal and it was completed on Jan 23 isn't it? Does their agreement includes a clause that final number of shares is dependant on the average share price between time A and B?
Thanks in advance for your comments.
VG, I hate to burst your all knowing bubble, but I seriously doubt that Oct is shorting. What has happened is a bad market, bad news (which has been dealt with) and some program trading which blew it down. Notice today how it jumped to up .30+ on very little vol. Look at the vol, not enough to screw with for Oct with 20%.Oct has already booked 50% of their projected sales in the first 2 weeks of March. The new directors will take care of the bad decisions the Tong's previously made. One piece of news or a fund buy or an analyst rec and we'll all forget about the $1's $2's $3's and $4's
Jeff, I just spent 15 minutes writing a reply to you and Yahoo bounced me out with posting...bummer...let me summarize.
1. It's Octavian shorting.
2. Management sucks, but you already knew that.
Thats the short (parden the pun) version.
I called Jacob on Friday morning. He called me back within two hours. I spoke with him for about 20 minutes. Of course, he has no idea why the stock is sinking. He said CRM is doing well. He mentioned how Octavian has 40% of their budgeted revenue/orders already booked and it is only early March. I asked about why so few PR about selling machines. He said they are lnly allowed to give PR on VERY FEW deals, and those are usually in Europe. Macau is just so competive, nobody wnats to let anybody else know what is going on. Fixing accounting and auditor issue was real drag on victor and tony's time last yr. They have very big opportunities in china Lottery.
I just sent the following email to Jacob...
The recent 50% drop in share price of PacificNet is troubling to the investor community. It appears that material adverse information may been leaked. If there is material adverse information that might have been leaked, then PACT needs to IMMEDIATELY issue a PR releasing this leaked information to the public in general.
At the very least, management should formally comment to Wall Street as to the unusual tradfing activity. EVEN IF MANAGEMENT ONLY SAYS THAT THEY KNOW OF NO REASON FOR THE DROP IN PRICE.
I (and many other investors) have lost over 50% of my investment in less than 30 days, and nearly 17% just today. The market needs some information as to why management thinks the price has dropped this much.
Is there a NASDAQ compliance issue?
Is there a cash position issue?
Is there a stock dilution issue?
Is there another earnings delay issue?
Is there and auditor issue?
What might be the reason for this drastic drop in price?
This is the kind of price drop that brings class action lawyers out of the woodwork. PACT management needs to get out in front of this issue and let the investing public know what is happening.
I await your response,
With PACT being so "closed mouth" over the last 2 years, I really don't expect any info from them. But it's pretty obvious that some BAD info has been leaked and those "in the know" are placing market sells just to get out. If thats the case and management doesn't get out in front of this issue, you can expect class action lawyers to be all over this company. And soon!