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Lender Sells NetSol Shares Pledged as Collateral

November 07, 2000|Bloomberg News

NetSol International Inc. in Calabasas, a Pakistani software developer, said an unidentified lender sold 72,900 shares pledged by Najeeb Ghauri, its president, as partial collateral for a loan after the stock price fell and he didn't repay it.

Ghauri pledged 448,750 shares to guarantee the loan, according to the company's proxy, filed last week with the Securities and Exchange Commission.

The loan's terms required it be paid back if the stock fell below $20, according to the proxy. That happened Sept. 15. The stock fell steeply over the spring and summer, after reaching a high of $80 on March 3.

"Due to a decline in NetSol's stock price, the financial institution demanded the entire loan be paid back," the company said in the proxy.

The shares were sold between Sept. 15 and Sept. 30, when the stock traded between $11.31 and $21.94.

NetSol, then known as Mirage Holdings Inc., went public in 1998 as an importer of exotic clothing from Pakistan. That business soon soured and it bought a software company from Najeeb's brother, Salim Ghauri, and changed its name to NetSol.

For the fiscal year that ended June 30, NetSol's loss doubled to about $3.4 million, or 35 cents a share, from $1.6 million, or 44 cents, on fewer shares.

Revenue rose to about $7 million from $3 million.

The shares have dropped 89% from their high in May, creating a paper loss of $150 million for the company's largest shareholder, the Blue Water hedge fund group of Manhasset, N.Y.

The fund owns 19%, or 2.1 million shares of the company.

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