EMAG Deal: Is SIBL another Madoff?


For anyone involved in the EMAG merger, this article may be of interest. As a reader commented before, it brings forth the idea that SIBL is “too” consistent and we know far too little to be sure. Another “potential” Madoff.

Although the article is an opinion piece, it is interesting as well as the link to a PDF report on SIBL.

The EMAG deal is expected to close tomorrow.

  • B. Dubow

    Interesting implications for the EMAG deal. Suppose for a moment that you’re a crooked CEO at an International Bank that cooks its books. Well one day before you’re supposed to come up with 68 million bucks, an opinion piece comes out saying that your company is a fraud and uses the failure to provide funds for the EMAG deal in December as proof. What do you do when the merger closes tomorrow? A) Fund the deal, even if you have to sell the furniture in the CEO’s board room to get it done, and hopefully avoid further inquiries B) Mysteriously don’t show up with the money at the closing table–again!–and hope that no one asks “Why?”.

  • Hi B. Dubow,
    It is interesting in a bad way :)

    If SIBL is a crook, they must be smarter than Madoff x1000 as they disclose their financial status and statements. Although I don’t have a clear idea about their auditors, I’m sure it’s better than Madoff’s “don’t ask, don’t tell” policy.

    Hopefully SEC won’t do anything until the deal closes.

  • MKL

    Yegads. You’d think they coulda said something before.

  • MKL

    BIRMINGHAM, Ala., Feb. 11 /PRNewswire-FirstCall/ — Emageon Inc. (Nasdaq: EMAG – News), a leader in enterprise medical information technology systems for hospitals and health care networks, announced today that it has been informed by Health Systems Solutions, Inc. (OTC Bulletin Board: HSSO – News) that it does not expect that Stanford International Bank Ltd. (SIBL) will provide the funding necessary to consummate the parties’ merger transaction today. The merger was scheduled to close today, February 11, 2009, in accordance with the terms of the parties’ amended merger agreement. Emageon is evaluating its options in response to this development.

  • Andrei

    Is it me or is EMAG not trading this morning?

  • MKL

    No doubt jammed up with SELL SELL SELL

  • Andrei

    So what do you think will happen now with this whole thing?

  • MKL

    I dunno. Im bummed. Didnt want to hold this stock to see what it could do.

    They are entitled to 9m. They do have a valuable service. However they have not been too very good at the business of making money with their service. I had the misfortune of not being able to sell at any reasonable loss this morning so now I am looking at a HUGE one. Not much to do now. The decision to hold it (—–) or sell at this terrible loss is not going to be that much different right now, or a few hours from now.

    I do think someone else will want them. I don’t know if I am prepared to wait for that to take place. I do not think without a merger or a change in the board that they will be much better at making money than they have been.

  • John

    Might as well wait it out a bit here. The selling today should be a bit overblown. I would not be surprised to see a bit of a rebound off these lows. Remember, the company is not worthless. In full disclosure, I sold half my position and will hold the other half until some more news comes out.

  • Andrei

    Yeah I agree with you John. I think all the bad news is factored in at this point. It can only go up some from here…as for disclosure–I did not sell any of my shares yesterday and am paying for it now. Really hoping for more clarification from EMAG on the new developments.

  • Alll I can say is wow. I did not sell as well. Really contemplated it but did not.

  • MKL

    I have the flu, don’t have all my faculties. I am going to let this sit. But I want to say congratulations to you, John, on your sell yesterday, and that it’s nice for me in it’s own way to not have been in this alone. EMAG did say HSSO said SIBL could not provide the financing “today”. Not trusting their disclosure timing, at this point. Doesn’t seem the intentions of their disclosures HAVE been in their stockholders’ best interests, no reason to think they will all of a sudden start operating in their stockholders’ best interests.

  • Jim

    Over 90,000 share were sold yesterday in a few transactions. I’m very interested to find out if insider trading occurred. I would like to see a class action lawsuit. I lost roughly $10,000. Not to happy today.

  • MKL

    And, I am interested to know what Oliver Press Partners did with their shares, as well as Accipiter Capital. Did THEY sell yesterday in that cliff drop? Were they warned?

  • @ Jim
    Can feel your disappointment. What a surprise.. My fault for being too greedy and trying to milk the last drop out of it.

  • MKL

    I just spoke with Gus Oliver at Oliver Press. They do still own all their shares. They are, as he said, “still all in.” They are still on the board after getting their board seats in a proxy fight last summer. And they are still fully committed to increasing value. He, too, is frustrated, but not out. He spoke of many of the aspects we have spoken about here.

  • Jim

    Mine too. I thought about selling last week but decided not to. I more angry at myself for advising 3 other people who bought significant shares and lost. I’m done giving advice to anyone for this year. The market is way to unpredictable to be giving advice. A value investor is hard pressed to make a good decision right now.

  • John

    Sorry for the misunderstanding before… I sold half at the open this morning. I got greedy and broke one of my arb rules for the first time. For mergers that I have any skepticism at all, I always sell into the closing date. Got greedy yesterday when the spread did not close closer to the buyout price and paid for it just like the rest of you.

    Jae
    I noticed on your twitter post that SIBL backed out. Did you find any more information other than Emag’s initial press release or are you speculating that they have backed out entirely? The only news I have found this morning is the release saying that SIbl is not expected to provide funding for the merger to close today. (which PROBABLY means they have backed out)

  • Ken

    Bad news for sure. I guess the one lesson I have learned is that I probably did not do enough due diligence on the parties involved with the purchase. More in depth reading of SIBL’s website and reports might of set off more flags had I done so. I am holding my position for the interim.

    Ken’s last blog post..WSC Dividend Increase

  • @ MKL
    Did Gus mention anything else?

    @ Jim
    The market sure takes people for a ride.

    @ John
    Until SIBL changes their mind or EMAG pursues other action, I have to consider the deal dead. I haven’t found anything else and although the language is unclear, no point in hoping I guess. I’ll have to monitor what happens in the next few days and find an exit.

    @ Ken
    I read through their website and I couldn’t find any real warning signs. Sure their returns may be too consistent but I don’t think that had to do with the deal. There must be something else going on that we don’t know about.

    @ All
    Depending on what transpires over the next couple of days, I’ll probably be taking a huge 50% loss. The risk in risk arbitrage played out and I should have taken the chips off the table when something smelt fishy yesterday.

  • MKL

    JaeJun, I will tell you more of the conversation, but there is nothing terribly specific.

    I did not ask Gus anything other than my main interest: Are you still in? Knowing he’s got board seats I realized he couldn’t/wouldn’t speak confidentially anything with me. We commiserated a bit about how disappointing this was. When I asked him if they had sold he exclaimed “We CAN’T sell!” so I got the sense that he wished he could’ve. Which could mean his frustration is prior to this morning, that maybe he knew somethings about the deal which prevented him from selling. His comments on it falling through indicated disappointment with SIBL but acknowledged the strange and unfamiliar environment that all are in. He did say they now move on to Plan B. I did not ask if B included SIBL, or not. I did not ask if there was also a Plan C. I left him with my name/phone/email if there was anything I could do in coordination with his Oliver Press Partners trying to get this company to make better shareholder value.

    Then we went over a bit about how it iS a good business idea that has yet to make as good a business as it could be with good shareholder value in as vague and polite of words as possible.

  • Hmmm… I see..

    I rang EMAG but they didn’t pick up. What’s also interesting is that HSSO is up 40%. Up just as much as EMAG is down.

  • MKL

    I could not get Accipiter on the phone.

    Seems that the acquiring company usually loses value during a merger, to go up later after the acquisition realizes better business. So I’m just assuming that HSSO went down, as the acquirer, and now that its not taking on that responsibility, it’s gone up. I don’t think anything is fishy there.

  • MKL

    Cerner (CERN) Vital Images (VTAL) and of course Siemens (SI) could be enticed…

  • MKL

    JaeJun I don’t know if this pasting will work, but here is an article I thought was of interest re: Augustus Oliver.

    http://www.marketwatch.com/news/story/activist-hedge-fund-returns-wane-their/story.aspx?guid=%7B8BB93ED9-82C1-4D6F-A016-36F1971C46A1%7D

  • I’ll have to see what happens tomorrow. My stop loss is set.

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