February 20, 2005
I write in response to your request for comments regarding the delisting of Carmel Containers [Inc.] (the "Company") from the American Stock Exchange.
My wife, I and many friends are holders of the common stock of the Company and we purchased those shares on the open market. The Company’s filing suggests that there are relatively few shareholders. As the Company treats all shares in street name at a particular broker as a single stockholder, this statement may appear to be correct but in fact, there are many, many individual accounts that are aggregated as one. I question whether there are in fact fewer than 300 shareholders if each individual account within each brokerage firm’s holdings is counted individually.
My wife and I hold our stock in retirement accounts and we plan to sell our stock incrementally and withdraw the proceeds to meet our living expenses once we retire. Other owners of the stock of the Company are similarly situated. We will have no means to sell our stock as we contemplated if the stock is not publicly traded on an exchange. I do not believe the Company mentioned in its original prospectus or in subsequent SEC filings that TOTAL illiquidity and being locked into a quasi-private investment were risk factors investors should take into account. Also, it is likely to be very difficult (if not impossible) for brokerage firms to assign values for year-end retirement account valuation purposes as mandated by law.
I, my wife and my friends will be hostage to the Company if it does not choose to list its shares again. Other than that unlikely possibility, we would presumably only be cashed out if the Company chooses to enter into a merger or sale transaction. Had we wished to invest in a private company, we would have done so. We feel that we are being coerced into an investment we did not elect to make. Had the Company chosen to delist and simultaneously offered a cash tender for all shareholders that did not wish to be a party to the delisted entity, that might have been an equitable proposal. A price in the $10 per share vicinity might have proven to be fair. Moreover, many of our friends are not accredited investors and it is questionable whether they should be forced into a quasi-private investment.
Furthermore, I wonder what motives might truly lie behind the Company’s desire to be delisted. Is there a desire to not make public various dealings that may occur among interlocking companies and their managements? Is there a long-term plan to take “under” the Company at a price significantly below fair market value after having worn down the smaller non-influential shareholders? Is there a plan to further deregister with the SEC and file no Company financial results at all? I am uncertain, but the Company’s recent behavior is certainly suspect.
It seems to me that the Company is seeking to eliminate liquidity and transparency. The Commission should not permit this. Rather, it should prohibit the Company from delisting unless a mechanism is established to allow the smaller shareholders to receive the fair value of their shares. The Company should not be allowed to undermine the equitable goals of Sarbanes Oxley and the long-term liquidity interests of its shareholders.
Michael and Carol Wasserman