This story broke yesterday when Tom Harvey, of the Salt Lake City Tribune, published his article. I went through the whole article I realized several issues. First is the fact, there are many moving parts of the rise and fall of MonaVie aka MYNT, and Second…
If I get this right, and it’s tricky as I said there are many moving parts, and we are just now pulling the lawsuits and filing, here is what I see on the surface.
1. In 2010 two transactions took place (not sure of which came first at this point); major stockholders sold their stock valued at that time at $186 million to the EMPLOYEE ESOP secured by a high-yield (article called it an “exorbitant interest rate), and during this same year, MonaVie executives sought out financing for $182 million from TSG-MV Financing LLC, securing “virtually all the assets” of MonaVie.
Here are my observations…
With the shares being secured by a note (The First Party), and the assets being secured by a note (The Second Party), doesn’t the securing parties need to agree and sign-off on any significant “secured deals” which could adversely effect the overall value of the shares and/or assets backing up the value of those notes?
This was all done in 2010, and now five years after, all of a sudden we are to believe someone or a group of someones realized that MonaVie’s assets are next to worthless, causing the shares to be worthless?
I can’t buy this! Here is my early deduction prior to reading all the lawsuits and court filing.
1. I think when the talks and agreement was reached between TSG-MV Financing LLC and Jeunesse in late March, none of the founders of MonaVie, were brought into the conversations until the deal was signed. And even then they might not have known about it, until they read the press releases.
2. The founders of MonaVie (or whoever sold the shares to the ESOP) realize that the ESOP is now going to default on the high-yield note, and that income is gone. Unless through a lawsuit proving negligence by the Trustee, the Trustee either personally (the bank) or their insurance carrier is forced to pay off the note. (although this lawsuit might have been prior to the announcement of the purchase by Jeunesse.
3. This ESOP deal seems as convoluted as ENRON! It seems on the surface that the majority of MonaVie shares were sold to the hardworking employees of MonaVie, while the assets of MonaVie which were for the most part the only real value of the shares, were sold (I guess I should say mortgaged) off to another group, without the knowledge of the one group that should matter most… the EMPLOYEES!
4. No matter how the lawsuits pan out MonaVie is done as a stand alone company. Like Monarch Health Sciences before it, when any company decides to launch a network marketing distribution channel, the company will rise and fall on their public relations.
When independent professionals who are part of the network marketing community realize the company they have been promoting, recruiting and selling for, is a sinking ship, they will seek out other income opportunities.
In the case of MonaVie, the reps didn’t have to go seeking out a new home, one came to their rescue. Be it a white knight in shining armor, or a wolf in sheep clothing (as the article kind of alludes), Jeunesse and the Jeunesse network marketing arm seems to be the biggest winners at the moment.