NorthPoint vs. Verizon is a A civil suit not a criminal suit
By: away_out $$$$
20 Jul 2002, 01:15 PM
EDT |
Msg. 30594 of 30658
(This msg. is a reply to 30518
by whiteknob.) |
In civil court
we only need a preponderance of evidence, not the largest quantity -- just
the most convincing. And we only need the jury to make the judgement call
that it leans %51 or more in our direction.
The jury could say:
"There isn't a doubt in my mind that Verizon left the merger
without legal cause. All those poor employees, vendors and shareholders.
Walking away from the merger agreement wasn't justified, but was it
planned prior to the act. After hearing everything I heard in court, is it
reasonable for me to think that Verizon had any idea at all as to the
damage that would be done as a result of their action? Were they aware
NorthPoint's financial condition? Were they aware of the trend in the
Telecom Index that would indicate NorthPoint would be harder pressed for
cash than usual because of the over-all market conditions? Did Verizon's
actions prove they were at least trying to live up to what they committed
to when they negotiated the merger agreement, or were those words and the
initial $150M a fraudulent misrepresntation of their true intentions? Did
they have any reason to believe that investors would buy and hold
NorthPoint stock because of the initial funding delivered and $200M
promised Jan. 1 2001? I have to answer yes to all the above. I think what
Verizon did was outrageous. I'm want to ask the Judge if there are limits
to punitive damages. Those poor people. Too bad I won't be able to serve
on the jury for the criminal case.
"On written evidence presented:
this is a close call, although the internal memos regarding renegotiating
the whole deal for 100% instead of 55%, before they backed out indicates
that there's no doubt that they weren't happy with the deal the way it
stood. I'm not sure how pervasive those feelings were, or if the idea in
the memo was shot down. If there was a bantering of memos going back and
forth on this topic NorthPoint would have 100%, If the memos are one-way,
they add to my overall impression but, standing alone I'll call this
50/50.
"They presented some pretty damning testimony regarding
conversations that took place during the negotiations. There were multiple
witnesses. Verizon seems to remember it a little differently, but
NorthPoint's stand is that the significant changes in the text of the
Merger Agreement were the result of those conversations. Those changes and
definitions weren't added as a result of a 10 minute conversation, they
are significant. If NorthPoint wasn't picking up on some negative vibes
coming from Verizon I can't believe those changes would have been in
there. I don't understand the stock market, but a price is a price and
NorthPoint clearly showed that the Telecomm Index was clearly decreasing
in price during June, July and early August. As it was they were being
purchased at far below what they were worth 6 months earlier. I feel that
if I were in that position I would want to protect myself from someone
using the MAC clause if the market continued it's trend, just like
NorthPoint did. Now, with the benefit of hindsight, it's hard for me to
think that the idea of reneging was a new one in November. When you hear
all the testimony and look at the what actually happened, I have to give
NorthPoint better than 70%."
"I have a list of the newspaper
articles and analysts opinions in front of me. I don't know what their
beef was with DSL and the purchase of NorthPoint, but they sure didn't cut
Verizon any slack. Verizon's share price took a real hit. The stock price
decreased more than the cash they were paying for NorthPoint. I don't
think Verizon expected that. I was surprised to hear how much debt Verizon
has for a company that is paying a regular dividend. The cost to Verizon
of having analyst confidence weekend would be huge if it affected their
debt rating. One of the lawyers said that as their debts come due they
don't always pay all of them -- they pay the interest and renegotiate new
terms on the principle. That could certainly be a motive for their
reneging. Also their bonuses were tied to share valuation and this
obviously took a hit. Some of these news articles show Verizon restating
their earnings in the same article in which they announce the termination
of the merger - which was a cold thing to do even if the one affected the
other. If the motive was MAC rather than earnings, why didn't they give
the same detail regarding their interpretation of the MAC that they did to
revenue and earnings projections? It is too suspicious for those two
thought processes were so closely linked, in public, by accident, when
Verizon was so silent otherwise. I give 80 %to NorthPoint."
"Before and after the merger, as well as post break-up, NorthPoint
released substantial amounts of information to their employees, the SEC
and the press. Verizon, in contrast, can point to very little evidence
that demonstrates that their heart was in the deal to any extent from the
beginning. NorthPoint was obviously delighted and excited to be the
largest high-speed data carrier in the world. Verizon didn't even fake
being excited. Also, while NorthPoint forged ahead with the discovery
process, Verizon was sent multiple letters from the FCC reminding them
that they needed to provide additional information. Verizon met with
NorthPoint and learned everything from them, and didn't respond in kind.
Verizon is a large company formed out of some very large mergers. This
isn't anything new to them. Their actions didn’t go along with what they
agreed to in the merger agreement. Purchasing $150M worth of NorthPoint
Stock, is the only thing I see to demonstrate that Verizon was following
the terms of the merger. Even here, within a short period after reneging,
Verizon applied to the FCC for credit for is investment against a previous
$500M obligation to invest out of their territory. Verizon didn't say
much, however after a major merger agreement fell through, things went
very smoothly for Verzion. Verizon's actions or lack of action on so many
aspects of the merger agreement didn't ever demonstrate a sense of
urgency, or a good faith effort to make the merger work. When my kids know
they're in trouble they don't want to look me in the eye and talk about
it, they wish the issue would just go away. This is exactly how Verizon
acted. NorthPoint gets over 80% here.
My opinion as
expressed by my over active imagination. All the above is fiction - today
.... If I were Verizon I'd bring my checkbook next Tuesday. If I didn't
then after the 29th I'd keep a toothbrush and clean pair of socks with me.
Hang in there team, we're in the home stretch. The jury will
reward those that keep faith in the system.
away_out
(Voluntary Disclosure: Position-
Long; ST Rating- Strong
Buy)
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