Monday, March 28, 2011

Citizen Journalists Elucidate Recent Zenn Shakeup

Zenn Motor Company has recently undergone a shakeup of its board of directors and management that has left many scratching their head wondering what was going on. Thanks to the efforts of a couple inquisitive and remarkably thorough citizen journalists, we have the benefit of a more enlightened view of the battle to control Zenn Motor Company's future.  If you haven't already done so,  have a gander at the AGM diary entries penned by TheEEStory users  -->G<-- and his compatriot PFujimoto.

First, the good news. Zenn's management has been fighting over how to best maximize their EEStor investment.  We would all be in big trouble if Zenn's enterprise weren't serious enough to occasionally generate this kind of situation.  My partial first clue that this was going on was the distinct lack of communication from Zenn to the public for the year leading up to this AGM:  very strange indeed for a little company who seemed to be in every newspaper, magazine and television program in North America the year prior.

Now the bad news. Zenn's management has been fighting over how to best maximize their EEStor investment.  Even though it's also good news,  it represents a risk of uncertainty that no one following EEStor wants to see.  What is the bone of contention?  Most importantly, what caused new board member Roger Hammock to become involved is the burn rate at Zenn and not understanding what exactly the money is being spent upon there.  Hammock & his business partner own over 1 million shares of Zenn and as he mentioned recently, he has visited EEStor.  In plain English, investors like Hammock worry that Zenn is spending money too rapidly requiring a new round of financing which would dilute the value of shares owned by fellows like Hammock.   It's typically easy to have conversations about such things but when one of the parties shows up with an army of attorneys threatening a proxy fight,  there's more than a small disconnect in force.