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BRILLIAN : BRLC: Last Remarks

09 juil. 200816:45

Samuel Sanmina: Last Remarks on Syntax-Brillian
by: SA Editors posted on: July 08, 2008 | about stocks: BRLC

Surprisingly (or maybe not so surprisingly for others), a little more then two months after analyst Tristan Gerra of Robert W. Baird stated that chances of bankruptcy for Syntax-Brillian (BRLC) “are very low” and that company will be able to refinance its debt, lowering its interest expense “significantly”, the company files for Chapter 11.

I wanted to say this back then, but for slander and libel reasons, I chose not to. In my personal and humble opinion, it was nothing more than to help pump the stock price back to $1.50 so some of the institutional holders could exit at a smaller loss before this current event occurred.

The company entered an agreement to sell its Olevia LCD division to TCV Group, one of Syntax-Brillian's original partners, which provided the plastic injection molded parts for the Olevia televisions under a newly created company called Olevia International Group. As some may recall, Syntax-Brillian originally wanted to change their company name to Olevia International Group, but even with shareholder approval, they later decided not to for some reason. Now it appears that we know the answer why.

I had actually said a couple of months ago, partly serious and partly joking, to some of my colleagues that the company was probably planning to use the new name after exiting Chapter 11. It appears that I was partially correct. Instead of using the name after Chapter 11, they are allowing the company acquiring their Olevia division to use it while the company is in Chapter 11.

The terms of the agreement is that TCV Group / Olevia International Group will receive most of the assets and property of the Oleiva LCD division owned by Syntax-Brillian in exchange for assuming $60 million in debt. This means that Syntax-Brillian transfers all the assets of their Olevia division to TCV along with $60 million in debt, and BRLC receives no cash from the sale.

This is also, in my humble opinion, however I personally will not be surprised if some of the original founders of BRLC such as James Li, Chow Man Kit, eventually have a position in and even acquire ownership in this new Olevia International Group company in the not too distant or near future.

Speaking of James Li, he and the rest of the board members, including Vincent F. Sollitto, Jr, , Bruce Berkoff, David Chavoustie, Yasushi Chikagami, and Max Fang, all resigned as directors effective June 30, 2008. This left Michael Garnreiter as the sole board member, who then terminated James Li’s role as President and Chief Executive Officer. I’m guessing that’s the reason he didn’t resign, seeing that you do need at least one board member in a corporation.

In addition, the company is also announcing the intention to sell off Vivitar. The sale is occuring separately from Syntax-Brillian's Chapter 11. Vivitar is not part of the Chapter 11 filing.

Furthermore, the company received a delisting notice from Nasdaq for falling under a $1 trading price for over 30 days. The company stated they will not attempt to regain compliance and will let their common stock become delisted since they expect their common stock to become worthless because of the reorganization and subsequent transaction.

Although my legal knowledge isn’t too great, this move seems to actually be fairly well executed from a legal standpoint. After the reorganization, there will be nothing left but a shell company with no assets. Therefore, with the current lawsuits form their former partner TECO, former shareholders alleging fraud will have nothing to go after from the company. However, the lawsuits are probably just one of many reasons for this move by the company.

It certainly has been an interesting year and 2 months since I started writing about Syntax-Brillian on Seeking Alpha. Many fascinating events have occurred with the company since then, most of them very negative. This last event seems to be the final nail in the coffin. I personally hope that some of those people who read my articles sold out, or at least avoided buying BRLC altogether, and avoided this last tragedy with the company.

I am not sure whether Seeking Alpha will publish this article but I certainly hope so since this is most likely will be the last on the company seeing how it will not be around much longer. Hopefully this event will provide some closure to some shareholders that are still holding.

Disclosure: I would not say I am long the stock but I did buy 1 share of BRLC and requested the stock certificate. I am having it framed to put on a wall. It is to serve as a commemoration and memento of the company since the stock most likely will not be around in a few months. Other then that, I have no position in the stock.


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