Letter to SamsysI emailed the below to Samsys and Gerry Wimmer of investor relations Monday, March 27. The next day Samsys announced their rejection of default and intention to resist any action taken by Wellington on that basis. I don’t know if my letter had any bearing on that, but I was encouraged to see management taking a stand. So much so, I bought more shares that week. Silly me.
Sregit, I’ve forwarded the original I emailed from my Yahoo account to your hotmail. It’s the complete email (I lopped off a little here to shorten this post) along with my name. Don’t know if it’s of any use other than evidence of a concerned shareholder communicating with the company.
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In light of recent events and the unusual trading volume in SMY that’s ensued, as a shareholder I find this from your material change report of September 15, 2005 disturbing:
“Each common share purchase warrant entitles its holder to purchase one common share in the capital of SAMSys at an exercise price of $0.86 at any time until September 15, 2008. The Debenture is convertible at the option of the holder into common shares in the capital of SAMSys at a conversion price of $0.86 per share or, in the event of a default by SAMSys under the terms of the Debenture or the secured debenture issued to Wellington Financial Fund II on August 31, 2005, at the volume weighted average closing price of the common shares on the Toronto Stock Exchange for the five trading days immediately prior to conversion.”
The volume of trading over the last 2 days can’t be solely accounted for by panicked retail investors but is more likely due to naked short selling or swing trading by the debenture holders or agents on their behalf who make a market in your stock, with the sole purpose of depressing the stock price to acquire more shares in your company through conversion triggered by default.
Unless you’re colluding in this, which I take on faith from recent press releases and your conference call you’re not, I urge you to seek the assistance of the OSC and TSX to investigate what appears to me to be manipulation of your stock price for gain of your lenders at the expense of your shareholders. And further, to the extent any violation of market rules is found or even suspected, to consider engaging legal counsel to pursue litigation against the perpetrators.
I have followed an American oil and gas services company that has gone through what I suspect you are now, although they were in a much worse situation. They stood their ground with convertible debenture holders (hedge funds Manchester and others – see copied PR of January, 2005 below) and with new financing turned their company around to the benefit of many loyal shareholders, including myself. I still hold shares in the company. If you’re interested, it is OMNI Energy Services based in Carenco, Louisiana – OMNI on the Nasdaq. I’m sure the company’s CEO, James C. Eckert, would be more than happy to talk to you if you wish. Contact information can be found on their web site at: https://www.omnienergy.com/
Respectfully,
< my name >
Shareholder
Press Release Source: OMNI Energy Services Corp.
OMNI Files Suit Against Debenture Holders
Tuesday January 25, 4:07 pm ET
Suit Seeks Disgorgement of Profits Realized Through Statutorily-Prohibited Short Swing Sales
Company to Request NASD Investigation in Trading Activity
CARENCRO, La., Jan. 25 /PRNewswire-FirstCall/ -- OMNI ENERGY SERVICES CORP., (Nasdaq: OMNI - News) announced today it has filed suit in the United States District Court for the Western District of Louisiana against the holders of its 6.5% Subordinated Convertible Debentures (the "Debentures). The suit alleges claims against Provident Premier Master Fund, Ltd., Portside Growth and Opportunity Fund, Manchester Securities Corp., Elliott Management Corporation, Gemini Investment Strategies, L.L.C., Ramius Capital, L.L.C., and Gemini Master Fund, Ltd. (collectively the "Debenture Holders") arising under Section 16(b) of the Securities Exchange Act of 1934. The Company also announced today that it has been in discussions with and expects to formally request the National Association of Securities Dealers ("NASD") investigate the short-swing trading activity in its common stock by the Debenture Holders while beneficially owning more than 10% of OMNI's common stock (on an as converted basis). The Company believes the Debenture Holders engaged in short-swing trading of the Company's common stock in a scheme to deliberately manipulate the price of the Company's common stock. By "shorting" the Company's common stock and forcing a decline in the trading price, the Debenture Holders increased the number of common shares they are entitled to receive upon conversion of the Debentures for shares of common stock.
Commenting on the litigation, James C. Eckert, OMNI's Chairman and Chief Executive Officer stated, "It is especially troublesome to see the adverse impact on our market capitalization caused by this alleged short-swing trading activity of the Debenture Holders. This trading activity appears to have unjustly pressured the stock price for the potential gain of the Debenture Holders. The Company's fundamentals remain strong. Seismic drilling activity is running at record levels. The Environmental division continues to post impressive results. The restructuring program to improve the margins reported by the Aviation division is continuing. We believe that the recent decline in the Company's stock price is unwarranted. Improper influences on our stock price caused by third parties will not be tolerated," concluded Eckert.
Headquartered in Carencro, LA, OMNI Energy offers a broad range of integrated services to geophysical companies engaged in the acquisition of on- shore seismic data and through its aviation division, transportations services to oil and gas companies operating in the shallow, offshore waters of the Gulf of Mexico. The company provides its services through several business divisions: Seismic Drilling, Aviation (including helicopter support), Environmental, Permitting and Seismic Survey. OMNI's services play a significant role with geophysical companies who have operations in marsh, swamp, shallow water and the U.S. Gulf Coast also called transition zones and contiguous dry land areas also called highland zones.
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