Friday, June 13, 2008

A follow-up to the Karch rumors

by Jason Schock at 7:30 AM

Karch hi-fives a Special OlympianA couple days ago, I published a rumor regarding a possible stock transaction and installation of Karch Kiraly into an executive role at the AVP.

Yesterday, I spoke with sources close to the AVP who sought to address this and other rumors, acknowledging some "nuggets of truth" to them but denying the general ideas.

There's a bit of information to parse, but here's the gist of it (disclaimer: I don't have an MBA, and I suck at math):

Q: Is the AVP going bankrupt any time soon?

According to the source, AVP experiences ups and downs and is "no worse off now" than it has been following its resurrection from bankruptcy in 2001. The source pointed to the recent election of six new board members this year, explaining that no board member would sign on to ride what they thought was a sinking ship.

Q: Who are these insurance companies?

It's possible the rumor is referring to two AVP shareholders with holdings in insurance and other businesses:

  • Diker GP, LLC - 16.9%
  • AmTrust Capital Management, Inc. - 23.7%
That's a combined 40.6% stake in AVP. Assuming these companies bought out all other shareholders except Armato - who owns 30.6% of AVP - they would own close to the rumored 70%. At today's stock price, that would be about a $2M purchase before any premiums.

The source, however, denied that these companies are looking to increase their stake.

Q: Will Leonard Armato remain as CEO?

The new board likes Armato and have no immediate plans to replace him, the source stated, though admitted they thought he "needs help."

Q: Will Karch Kiraly be stepping into any kind of executive role at AVP?

What I can only describe as an "informed source" stated that the door is essentially open to Karch to take on an executive role at AVP, though there is no clear indication if and when this will happen.

According to the same source, there was some talk amongst board members of bringing on Kiraly as an executive in light of his recent success with the US Open of Beach Volleyball, with the added bonus of neutralizing him as a potential competitor to the AVP.

Interestingly enough, Karch's agent, Steve Lindecke, sits on the AVP's board of directors. Lindecke and Kiraly created the US Open of Beach Volleyball with USA Volleyball, and Lindecke's company, The Elevation Group, produces the event.

 

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