By: wozdak $$$$$ 16 Mar 2002, 10:40 PM EST

Msg. 27741 of 27755 (This msg. is a reply to 27718 by DEODEBA.)

Deo - I have painstakingly followed your "File" parts #1 and #2 and I await the part #3, with the expectation of one who is waiting for the other shoe to drop. Your underlying theory here seems to be that Verizon orchestrated a "shorting" program, that began the day that Verizon's Merger Agreement with NorthPoint was announced and culminated with Verizon "covering" during the 3 days that preceded the announcement that NorthPoint was declaring Bankruptcy. Somehow, you seem to be pinning your theory on Verizon being in possession of some 11 million + shares of NorthPoint stock. Here's a few points that seem important here: (1) there is no evidence or proof that Verizon ever converted the 150,000 shares of Preferred into the 11 million + shares of common. In fact, the evidence just screams that they did not accomplish the conversion, ever. (2) So what if they did (or did not) convert the preferred into Common? Owning (or not owning) any amount of shares has no effect upon anyone's ability to "short" a stock. (3) I can see how it would be "delicious" to be able to pin a destructive shorting plan on Verizon. But how could anyone prove that Verizon was behind the shorting? Even more to the point, how could anyone distinguish the drop in NorthPoint's stock price from the drop in the stock price of any company in the DSL arena during the period in question? Did Verizon short ALL of them too? I'll concede that it is "odd" that NorthPoint's stock dropped big-time, on huge volume, the day that the Merger was announced. Any system of logic should lead to the conclusion that NorthPoint's stock price should have risen instead of dropping. I'll also concede that the huge, 3 day run-up in NorthPoint's stock price immediately before the Bankruptcy announcement could have been short covering, but it also could have been speculative buying by those of us who were expecting a "White Knight" to step in and rescue NorthPoint at that time. We even had a poster or two here who lied about seeing specific "White Knights" at the court house, submitting their bids. Those posters soon disappeared into the Internet Fog, never to be heard from again. "Something" went down, but can we shareholders prove what it was? If we can't prove it, what value is there in pursuing it. Is it your hope that the intriguingly suspicious and circumstantial nature of the events will convince our Trustee to launch an inquiry into the possibility that Verizon was behind a shorting program? If I am failing to "see" the real value of this, please forgive me and will you please suffer my ignorance with an explanation of what you think we (NorthPoint) can gain from your very extensive digging into this? wozdak

 

 

By: DEODEBA $$$$$ 16 Mar 2002, 11:41 PM EST

Msg. 27743 of 27755 (This msg. is a reply to 27741 by wozdak.)

Woz Please forgive me for keeping you waiting for my "part 3", most of my time was unfortunately taken in preparing my taxes with my accountant as I am about to travel soon. As you may notice it is 5:30AM in Paris and I've tried to catch up on many things but I have not forgotten that I ought to conclude my research on NP declared shares. Honestly I wouldn't mind FLK and the Trustee doing some research on the shorts at the time of the merger as I have a feeling they would not be wasting their time doing so, IMHO. As far as the buyers, right before the stock stopped trading, that should be interesting too, even though I believe I was one of them too at the time it happened (except I never shorted the stock! LOL). We'll probably never know if my theory was true or not, except if we find that out during trial...but if never considered by the lawyers that might be an interesting track to follow as I believe it can be checked. I am "CONVINCED" NPNT was very heavily shorted with no fondamental reasons at the time! I apologise as I am a little too tired to finish my reading for "part 3" but I will write it for sunday evening. Best regards, Deo

 

 

By: wozdak $$$$$ 17 Mar 2002, 12:04 AM EST

Msg. 27744 of 27755 (This msg. is a reply to 27743 by DEODEBA.)

Hi Deo - yes - I notice the very early (or very late) hour for you in Paris, but we all know that you don't sleep, so it was not surprising. OK - I see that you are hoping to get our Trustee/FLK to look into the theory that Verizon initiated a "short 'em to oblivion" program against NorthPoint the day that the Merger was announced. If that theory can be proven, I'd say that Verizon is DEAD MEAT. I really hate to play Devil's Advocate with my favorite stock (NorthPoint), but one very big thing that would just about totally shoot down such a theory is this: If Verizon (or any "outsider") was shorting NorthPoint for 5 months, how would that "outsider" know to start covering exactly 3 days before NorthPoint announced bankruptcy? Did NorthPoint tell the shorter to start covering? How could an "outsider" have known that bankruptcy was imminent? All the speculation, statements from NorthPoint and lies from certain posters indicated that a "White Knight" was about to charge onto the scene (I bought some shares at that time :-( Doesn't short-covering 3 days before bankruptcy indicate "insider" knowledge? How could an "outsider" know such intimate information? Am I missing something? I can't bring myself to believe that NorthPoint "insiders" were shorting NorthPoint. I sure hope they weren't. What do you think? wozdak

 

 

By: DEODEBA $$$$$ 17 Mar 2002, 01:14 AM EST

Msg. 27745 of 27755 (This msg. is a reply to 27744 by wozdak.)

Hi Woz Believe it or not I went to bed but could not sleep and went to check my computer (my mistress-like my wife calls it...lol) to find your message. OK! Tell me! Have you ever seen in your life a stock that gets the following % increases in 3 consecutive days and then stop trading? 01/10/01 0.343 0.375 0.312 0.343 2,437,800 01/11/01 0.343 0.687 0.343 0.625 13,348,200...+82,21% 01/12/01 0.718 0.968 0.625 0.750 13,183,800...+12% 01/16/01 1.031 1.468 1.000 1.406 13,673,800...+99,96% I suspect the trading halt was due to a too strong demand of shorts wanting to cover coupled with new longs wanting to enter...this unusual happening probably caught the MMs off guard and they did not want to be out of their own pocket and the Exchange (Nasdaq) stopped the trading...the rest is History. As much as it was contrary to logic for the stock to dive upon the news of the merger it was contrary to logic for the stock to surge like that before it closed...only a news like VZ going back to the negociation table to carry on with the merger could have brought such a burst! The "white Knight" story may have brought in 15% or 20% maximum as the company was in trouble and that was not definite and still a speculation, NOT 310%!!! Sure there might have been some NP insiders selling but I don't believe they were REAL shorters... I know, I know...it's a speculation! But isn't it what we all do when we invest in stocks? I can assure you I speculate for much less than that! I hope Time will tell! Best regards, Deo

 

 

By: wozdak $$$$$ 17 Mar 2002, 01:45 AM EST

Msg. 27747 of 27755 (This msg. is a reply to 27745 by DEODEBA.)

OK Deo - I follow the logic you present and I admit it is "possible" that it went down as you present it. BUT - I still want to know how anyone outside of NorthPoint could have known that bankruptcy would be declared in 3 days? Nobody could "guess" it that closely. If it was short covering, it seems like it HAD to be done with inside knowledge. Just now - something jogged my weary brain: A day or so after the trading halt at $1.40 per share in January 2001, I remember someone digging up a recent press release or a comment by a NorthPoint exec that either said or strongly implied that bankruptcy was imminent. I recall being shocked to see that information and so were many others. Maybe I can find that and post it. But, if such information was available before the big 3-day runup in price, why would the shorters know it but everyone else did not know it? Deo - it would be a great weapon for NorthPoint if they could show a shorting program by Verizon beginning the day the Merger was announced and ending the day before bankruptcy. I think it would take a miracle to be able to unravel it all and prove it, don't you? wozdak

 

 

By: DEODEBA $$$$$ 17 Mar 2002, 02:11 AM EST

Msg. 27748 of 27755 (This msg. is a reply to 27747 by wozdak.)

Woz If I was to tell you my entire version you might either get scared or either think I'm crazy! Not only do I believe NP was shorted but it was probably "nake shorted"...what attracted my attention was also the volume of these 3 last days...did you notice that they were for 3 consecutive days at a little more than 13M shares volume...how many times have you seen such a "coïncidence" in the entire volume history of NorthPoint? There was obviously a "race" for shares control before the stock stopped trading! Liz may have just closed the box on the grabbing hand! (little metaphore to express the thought...) We may never prove it but all these co.incidences are sure intriguing! Later, Deo

 

 

By: DEODEBA $$$$$ 17 Mar 2002, 03:21 AM EST

Msg. 27749 of 27755 (This msg. is a reply to 27748 by DEODEBA.)

Woz Have you ever read before the CERTIFICATE OF DESIGNATION in exhibit 2 from the merger agreement? This is an interesting excerpt: Section 7. Liquidation, Dissolution or Winding Up. If the Corporation shall adopt a plan of liquidation or of dissolution, or commence a voluntary case under the Federal bankruptcy laws or any other applicable state or Federal bankruptcy, insolvency or similar law, or consent to the entry of an order for relief in any involuntary case under any such law or to the appointment of a receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Corporation or of any substantial part of its property, or make an assignment for the benefit of its creditors, or admit in writing its inability to pay its debts generally as they become due, or if a decree or order for relief in respect of the Corporation shall be entered by a court having jurisdiction in the premises in an involuntary case under the Federal bankruptcy laws or any other applicable Federal or state bankruptcy, insolvency or similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and any such decree or order shall be unstayed and in effect for a period of 90 consecutive days and on account of such event the Corporation shall liquidate, dissolve or wind up, or upon any other liquidation, dissolution or winding up of the Corporation (a "Liquidation"), the holders shall be entitled to receive the Liquidation Preference of the shares of Convertible Preferred Stock held by the holder before any distribution shall be made or any assets distributed in respect of Junior Stock to the holders of any Junior Stock, including, without limitation, Common Stock of the Corporation. If upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, the amounts payable with respect to the Convertible Preferred Stock are not paid in full, the holders of the Convertible Preferred Stock will share equally and ratably in any distribution of assets of the Corporation first in proportion to the full Liquidation Preference to which each is entitled until such preferences are paid in full, and then in proportion to their respective amounts of accumulated but unpaid dividends. After payment of the full amount of the amount set forth above to which they are entitled, the holders of shares of Convertible Preferred Stock will not be entitled to any further participation in any distribution of assets of the Corporation. For the purposes of this Section 7, the voluntary sale, conveyance, exchange or transfer of all or substantially all of the property or assets of the Corporation or the consolidation or merger of the Corporation with or into one or more other corporations shall not be deemed to be a liquidation, winding-up or dissolution of the Corporation. Deo

 

 

By: callmeSnake $$$$$ 17 Mar 2002, 05:48 AM EST

Msg. 27750 of 27755

Deo I remember there was a press release or a speech done by Liz Fetter around Jan 9 or 10 that they were hoping to get the financing from banks but that no option were ruled out, including chap 11 or restructuring. so she "telegraphed" the potential Jan 17 trading stop, imho. Now, VZ or even Merrill Lynch ( which was against the merger anyway it seems and held large amounts of VZ shares btw) could indeed have started shorting in August. One has to realise that these guys, big companies, brokers, can short stocks MUCH easier than us and with more "discretion" too... but it can be proven, I'm sure. the SEC, if "cooperative and trustful" (!!!) can access such data should the trustee and FLK ask for it...

 

 

By: edvard_kardelj $$$$ 17 Mar 2002, 09:25 AM EST

Msg. 27752 of 27755 (This msg. is a reply to 27750 by callmeSnake.)

Possible explanation?! Snake Plisken writes: I remember there was a press release or a speech done by Liz Fetter around Jan 9 or 10 that they were hoping to get the financing from banks but that no option were ruled out, including chap 11 or restructuring. I remember this as well. There were rumors going around about financing (because NPNT was running out of cash), and last three days public was hoping that NPNT will get fresh cash injection. So many jumped in pretty cheap "lottery tickets" hoping that final PR will come solving the cash dilemma. Instead, voluntary BK11 PR came out as total surprise, at least to me. Kardelj

 

 

By: gw775 $$$ 17 Mar 2002, 10:33 AM EST

Msg. 27753 of 27755 (This msg. is a reply to 27747 by wozdak.)

hi,Wozdak.Enlighten me a bit (as you are so often able)isn't it legal for any one at any time for any reason to "short" any stock?    GW 775

 

 

By: DEODEBA $$$$$ 17 Mar 2002, 11:46 AM EST

Msg. 27754 of 27755 (This msg. is a reply to 27753 by gw775.)

Hi gw775 No it is not illegal to short stocks but if that was the case for NorthPoint, shorting 11M shares at a nominal of $14-$15/sh is not exactly an accessible investment for small investors but rather by a pool of very large investors and there should be an inquiry just as to eliminate such a possibility. By the way, you should ask your broker if he would agree for you to just short a stock on margin for 100K and let us know about his reaction... If VZ management was in the know, at the date of merger, they had no intention to carry on with the merger...I gather it would not have been too difficult for people of that stature to find the "friendly hands" that would short NP until the deal cancellation would IRREMEDIABLY bring the price much lower thus guarantying a profit! Regards, Deo

By: DEODEBA $$$$$ 17 Mar 2002, 02:03 PM EST

Msg. 27756 of 27763

THE STING Before I expose this version of my understanding of the chain of events that have led to "the forced suicide" of NorthPoint Communications I want any reader to be aware that this recital is a pure speculation of what could have happened and may, in no way, constitute an admission from its author as to be what truly has happened. Nonwithstanding political implications that may have, or not, influenced the decisions of the different parties involved, I make a point at solely looking at interests on a strictly material level. The merger between Bell Atlantic Corp. and GTE Corp. that created Verizon was undoubtfully in reply, in an unified way, to the "invasion" of new technologies endangering the survival of their old copper lines and that came with a cost: having to invest $500M in out-of-region competition as a condition for the FCC to approve the deal. Strangely enough, one could have looked at the FCC imposition as a deterrent to monopolistic aspirations of the new merger, but one could also look upon it as a "credit" grant to accomplish popularization of broadband... We should not take into consideration the problems Verizon was having with their Union workers that took place before the proposed merger with NorthPoint, as the argument is mostly unprovable, and keep our focus on the possible financial mechanics in place. As much we should not take into account the difficulties the overall economy was experiencing at the time, we should also admit we do not know if NorthPoint could have survived, merger or no merger. What is clear is that the proposed merger was so "advantageous" to a small company like NPNT, as it was merging with a "huge" company, that, in spite of economical difficulties, it should have propelled the stock price to higher levels on the date of announcement (August 7,2000) and there is strong suspicion that the expected bullish trend was absorbed and the stock declined thereon fueled by forces that had to be of a speculative nature and origin. If Verizon had decided to rid itself from DSL competition, it had found a perfect cover to do so with NPNT, and was hoping to come out of it as "the good guy". Best way to do that was to front the money showing the good intention while making some "friendly hands" recuperate the investment on the market (at the expense of small shareholders) thus, to guarantee the hidden retrival of a "potential" open loss. The deal itself is a "scream" as the advance of $150M was done in exchange of Preferred Shares and it is specified in the Merger Agreement that should NPNT commence in a voluntary case under the Federal Bankruptcy Laws or consent to the entry of an order for relief in any unvoluntary case under any such law or to the appointment of any Trustee of the Corporation, the holders shall be entitled to receive the Liquidation Preference of the shares of Convertible Preferred Stock(11M+) held by the holder(VZ) before any distribution shall be made or any assets distributed in respect of Common Stock of the Corporation. This means that VZ, in the order of priorities, gets paid back after some creditors but before us. Real cute isn't it? Not only did they get rid of NorthPoint forcing the Bankruptcy, or at least speed up the process, but they probably made some money on the stock, shorting it, and obtained a guarantee to be paid before us. And to top it all, they want to claim a credit of $150M towards their $500M obligation in their own merger. Please forgive the displaced thought but we use an explicit expression in France in such circumstances: "Its like wanting the butter, the money from the butter and the Ass of the farmer on top of it!" Talk about adding insult to injury! Deo

 

 

By: DDTC $$ 17 Mar 2002, 03:26 PM EST

Msg. 27757 of 27763 (This msg. is a reply to 27756 by DEODEBA.)

Deo As I remember it there were performance milestones in the merger agreement that NPNT had to meet. The cash burn rate for these milestones was high. NPNT agreed to it in good faith, feeling that they had a solid agreement. They were setup from the beginning to fail. IMO I think NPNT could still be a going concern with reorganization like COVD. As much as I hate to admit it, NPNT should have had better lawyers before they signed the merger agreement.

 

 

By: DEODEBA $$$$$ 17 Mar 2002, 04:03 PM EST

Msg. 27760 of 27763 (This msg. is a reply to 27757 by DDTC.)

Hi DDTC You have no idea how machiavelic the deal was! Did you know that VZ granted, in merger Agreement additives, the right for the heads of NP management to sell a specific number of shares (in the millions) thus, in agreeing in good faith, NP management was making itself "moral accomplice" of shorting the stock, thus providing VZ with the further weapon to eventually imply in Court that the decline in price was accentuated by NP management selling their shares...and they could be accounted for as this was a written agreement as opposed to an eventual hidden shorting promoted by VZ. (I'll find the document and post it) NPNT lawyers were acting in good faith too and they probably did the best they could in the circumstances...the deal was too good to be true...and I don't see how NP could have better protect itself as they could not, at the time, envision such a drastic exit from VZ's part. VZ's position is not that clear too, they did have obligations, even when the deal was off, that they did not fulfilled... There's hope! Deo

 

 

By: edvard_kardelj $$$$ 17 Mar 2002, 05:17 PM EST

Msg. 27761 of 27763 (This msg. is a reply to 27756 by DEODEBA.)

VZ - Dead Meat?! DEODEBA writes: Real cute isn't it? Not only did they get rid of NorthPoint forcing the Bankrupty, or at least speed up the process, but they probably made some money on the stock, shorting it, and obtained a guarantie to get paid before us and to top it all they want to claim a credit of $150M towards their $500M obligation in their own merger. If this can be PROVEN in Court of Law, VZ is Dead Meat. Literally. This will bring entire VZ BOD and wider (at that time: 08/2000 - 12/2000) to individual criminal charges against them, new criminal charges against VZ, and punitive damages will FAR exceed $4.00B US. Actually, I can say, there will be award in magnitude 1 or more VZ for 1 NPNTQ, and far more to come... There will be much more lawsuits initiated, and FCC will reconsider whole Telecom Act of 1996. This will change face of telecom business completely in US... If you all know what I mean! IMO! Kardelj

 

 

 

 

 

 

See this story of how CEO's of legitimate public companies have to suffer the abuse and loss of credibility of our companies through falling share prices due to illegal manipulation. 7/19/02 Convertible Preferred Shares shorted by Investment Bankers have Disastrous Results on Start Up Companies by forbes 7/20/02