Log On America Commences $100 Million Action Against Credit Suisse First Boston.Business Editors & Legal Writers PROVIDENCE, R.I.--(BUSINESS WIRE)--January 12, 2001 Log On America, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :LOAX) announced today the filing of an action against Credit Suisse First Boston Credit Suisse First Boston was originally the trading name of the Financière Crédit Suisse-First Boston, a London-based 50-50 investment banking joint venture formed in 1978 between the First Boston Corporation and Credit Suisse. Corporation (CSFB CSFB Credit Suisse First Boston CSFB Cyclically Shifted Filter Bank ) seeking recovery of $100 Million for CSFB's gross negligence An indifference to, and a blatant violation of, a legal duty with respect to the rights of others. Gross negligence is a conscious and voluntary disregard of the need to use reasonable care, which is likely to cause foreseeable grave injury or harm to persons, property, or and material conflicts of interest as LOA's exclusive financial advisor. The Company alleges that CSFB was grossly negligent and was deceptive in connection with the structuring and negotiation of the Company's sale of Convertible Preferred Stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". to certain institutional investors including Marshall Capital Management Inc. ("Marshall"), a subsidiary of CSFB; and the structuring and negotiation of an equipment purchase agreement and secured credit facility with Nortel Networks Inc. (NYSE NYSE See: New York Stock Exchange :NT) ("Nortel"). The complaint, which was filed in the United States District Court United States District Court In the U.S., any of the 94 trial courts of general jurisdiction in the federal judicial system. Each state, as well as the District of Columbia and the Commonwealth of Puerto Rico, has at least one federal district court. , Southern District of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of alleges that CSFB, after being retained by the Company as its exclusive financial advisor, represented that it would raise substantial capital for the Company from "name investors" and when it failed to do so, recommended the Company raise money by issuing floorless Convertible Floorless Convertible Used by companies that are in such bad shape, that there is no other way to get financing. This instrument is similar to a convertible bond, but convertible at a discount to the share price at issuance and for a fixed dollar amount rather than a specific Preferred Stock and promising to support the Company's stock in the market. One half of the convertible stock was placed by CSFB with Marshall. The Company has since sued Marshall and the other holders of the convertible stock alleging market manipulation. It is further alleged that CSFB negotiated the transaction with Nortel on unfavorable terms while failing to disclose to LOA Loa (lō`ä), longest river of Chile, 275 mi (443 km) long, flowing S from the Andes, N Chile, then W and N through the Atacama Desert, before turning W to the Pacific Ocean. that CSFB was also representing Nortel in other major financial transactions. David Paolo, President of LOA, commented, "We placed our trust in CSFB to provide us with guidance and advice in structuring our financial future. They made promises which were not kept and placed us in a precarious position by recommending and structuring a floorless convertible financing which is usually reserved as a financing of last resort for public companies in desperate financial condition. In contrast, Log On America was financially healthy with over $20 Million in cash, essentially no debt and an annual burn rate of less than $5 Million. We intend to recover from CSFB the substantial damage we have suffered because of its gross negligence and failure to properly and honestly represent our interests. After Credit Suisse abandoned LOA, they literally walked away from over $2 Million in fees because they knew how badly they had handled our account." About Log On America Log On America is a solutions-centric, facilities-based Enhanced Communications Provider (ECP (Enhanced Capabilities Port) See IEEE 1284. 1. ECP - Engineering Change Proposal. 2. ECP - Enhanced Capabilities Port. 3. ECP - Extended Capabilities Port. 4. ECP - Extended Concurrent Prolog. ) offering digital transport and application services to small, medium and large businesses throughout New England. Log On America's core products and services include local dial tone, in-state toll, long distance, high-speed Internet access and office productivity and security management application services; utilizing a wide range of broadband access and ASP technologies and partnerships. For more information about Log On America, please visit our website at www.loa.com. Forward Looking Statements Statements made in this news release, including those relating to the filing of an action against Credit Suisse First Boston Corporation, may contain forward-looking statements concerning the business and products of the Company. Actual results may differ materially depending on a number of risk factors including, but not limited to, the following: development, shipment and market acceptance and additional competition from existing and new competitors which will impact new customers. Other risks inherent in the business of the Company are described in Securities and Exchange Commission filings, including the Company's prospectus on Form SB-2. The Company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this release. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion