Shelby & Ginseng Forest

[DanElam]

I read with some amusement about the Shelby announcement with Ginseng Forest. It seems a lot of people didn't understand the announcement, the impact, or how it would affect any of the rumors.

1. Ginseng Forest is just a corporate shell that doesn't really do anything. They have no revenues - and no real expenses for that matter. It might have been a company at one time, but now it just a simply shell. Why is useful? Shelby's comments were DEAD ON in the press release: it is a public company. Once you have spent the money to make a company public, it means that you have some liquidity which is a lot easier than when you own a private company. The typical approach is for the private company to be "bought" by the corporate shell. The private company then gets to "go public" on the cheap and then end up with the stock. Clearly, Shelby is now the largest shareholder in Ginseng Forest, Inc. My guess is that the original owners of Ginseng Forest got some nominal dollars for giving up their corporate shell. It would have been a very easy (and common) transaction. (As an aside, this is the approach I would recommend to Factory Five if they ever went public since I don't see them getting to be large enough to do a formal IPO.)

2. The press release appears to grant the Shelby name, rights, etc. to the new company. We don't know the arrangements that Shelby had with SAI, but Shelby basically claims they are in default and that he can do whatever he wants with them. If I was a betting man, my guess is that SAI doesn't see it that way and that Shelby wanted a corporate shell to use in the fight. The shell does a couple things. First, it means that SAI potentially has to sue Ginseng Forest instead of Shelby himself. If they win, Shelby gets to keep his ranch and SAI just ends up with the seeds or whatever they have at Ginseng Forest. If it turns out that Shelby actually has a case, then it means he can basically raise investment dollars on the stock market (since this is technically a public company) that would allow him to go after SAI's parent company who has very deep pockets. Realistically, he is going to need big bucks if he wants to go toe to toe. This would be a way to do it.

3. It has nothing to do with FFR. SAI is who is building the cars, not Shelby. The rumors have all focused on SAI - and it was pretty clear from Shelby's statements that he wasn't going to do anything to help them. There is nothing in the press release to give credence either for or against any FFR-SAI rumors.

I shall now crawl back under my rock and work on today's spreadsheets.