$100 million New Jersey deli owner Hometown International just announced a merger with a bioplastics firm
- Hometown International, the owner of the so-called $100 million New Jersey deli, has agreed to a merger with bioplastics company Makamer.
- The company resulting from the merger will not operate the store, Your Hometown Deli in Paulsboro, but a worker there said the eatery will remain open after the merger.
- It is not clear how the 60 or so shareholders in Hometown International will make out in the deal.
Hometown International — that odd, publicly traded company with a market capitalization of more than $100 million despite owning just one small New Jersey deli — has announced plans to merge with Makamer, a private bioplastics start-up firm.
The money-losing Your Hometown Deli in Paulsboro, N.J., which is owned by Hometown International, will not be operated by the company that will result from the merger with the Los Angeles-based Makamer.
But a woman who answered the phone at the deli on Friday said, "We're still going to be open" after the merger is completed.
The announcement of the tie-up of Makamer and Hometown International comes nearly a year after hedge fund manager David Einhorn in a client letter noted the bizarre disparity between the deli's extremely modest sales, which were $25,004 for all of 2021, and Hometown's sky-high stock market valuation.
"The pastrami must be amazing," Einhorn quipped in the most-quoted line from that April 2021 letter.
On the heels of that letter, CNBC detailed the tangled business relationships and controversial history of a number of people connected to Hometown International, whose CEO at the time was Paul Morina, the high school principal and head wrestling coach in Paulsboro.
Morina, who was removed as CEO in May after those reports, is still listed as owning 31.5 million shares of Hometown International.
In its annual report, filed with the Securities and Exchange Commission on March 18, Hometown International disclosed that "the Company has identified a potential target company and is currently engaged in discussions regarding a possible business combination."
Makamer CEO talks to CNBC
Alex Mond, the head of Makamer, told CNBC in an interview Friday that he expects the merger with Hometown International, which was disclosed in an SEC filing on the eve of April Fool's Day, to be completed "in a few weeks."
After that, Mond said, he plans to soon after transfer what will be the bioplastics company's new stock trading symbol to Nasdaq from the over-the-counter markets.
Mond said Los Angeles-based Makamer considered Hometown an attractive merger candidate even after the headlines about the deli owner because of its status as a publicly traded company.
"We have investors who pushed us to go public," he said.
Mond said that going public will make it easier for Makamer to get much-needed money to grow its business, which launched more than three years ago, by issuing debt.
Mond said Makamer is in discussions with "major companies interested in selling our product," which is designed to replace petroleum-based plastics, and to reduce the amount of plastic pollution in the world's oceans and land.
"We're anticipating purchase orders," Mond said.
"We use 45 different blends, mainly hemp," Mond said about the firm's bioplastics.
"Hemp is the best replacement" for plastics, he said, noting that "it uses the least amount of energy, and it's easy to grow," is renewable, and "also cleans up the soil" of pollutants.
Stock price hits $14 a share
The SEC filing announcing the intended merger, which was made by Hometown International under the new name Makamer Holdings, did not reveal how Hometown International and Makamer were each being valued in the merger, or how the 60 or so shareholders in Hometown International will make out in the deal.
It is not likely, at all, that the shareholders will receive the current value of the share price, which remained unchanged at $14 per share after the end of the trading day Friday. That price gives Hometown International a market capitalization of $109.2 million, just based on outstanding shares alone.
HWIN, the current symbol of Hometown International, trades in very low volume, if at all, on the Pink platform of OTC Markets, an over-the-counter listing service.
OTC Markets in April 2021delisted HWIN from its OTCQB platform, shifted the stock to the less prestigious Pink market, and slapped a "buyer beware" warning on the deli owner "for not complying with the rules" of OTC Markets.
The last recorded trades of the stock were for 100 shares on March 8. Before that, the last recorded trades of the stock were for the same number of shares on Dec. 31.
'More details will follow shortly'
Peter Coker Jr., the Hong Kong-based investor who is Hometown International's CEO, in an email response to being asked about the merger said, "Everything that is available to discuss has been Disclosed in the SEC Form 8K."
"More details will follow shortly," wrote Coker Jr.
Manoj Jain, the founder of Maso Capital in Hong Kong, which is a major investor in Hometown International, declined to comment through a spokesman.
Maso Capital for more than a year had positioned Hometown International and another related publicly traded shell company, formerly known as E-Waste, as vehicles for private companies to merge with and become publicly traded themselves.
E-Waste last year entered into a reverse merger with EZRaider Global Inc., a privately held electric vehicle corporation. E-Waste itself before the merger had a market capitalization of $110 million despite having no business operations.
On the heels of CNBC reports about Hometown International and E-Waste, both firms, in highly unusual filings with the SEC, disavowed their stock's publicly quoted stock process, saying they were aware of no basis to support their companies' high market capitalizations.
Other major investors in Hometown International include the investment funds of two U.S. universities, Duke and Vanderbilt, with those funds having mailing addresses in the same building as Maso Capital.
The largest shareholders in the deli owner are a group of opaque entities in Macao, China, whose mailing addresses are located on the same floor in the same office building there.
Concern about management
Mond, in the interview, said that he and his current management at Makamer will be in charge of the merged company, despite the initial desire of people currently involved with Hometown to have management roles in the company when merger discussions started last year.
"They weren't OK with it, but that was our condition," Mond said. "It was all my management, or I'm not taking the deal."
Mond said that he knew of the legal and regulatory controversies surrounding people involved in Hometown before he was approached by two "Wall Street guys" whom he knew, who suggested merger discussions.
"I was concerned" about those controversies, Mond said. "That's why I made sure that our management takes over and not the old management."
Mond said that during negotiations about the merger he only spoke only "very briefly" with Coker Jr., Hometown International's president.
"Maybe three or four minutes," Mond said, referring to the length of his discussions with Coker Jr. on the phone.
Mond said that his main point of contact in negotiations was with Hometown International's lawyers, and "also James Patten."
CNBC last year reported that Patten was working at the time as a financial analyst at Tryon Capital Ventures, a North Carolina investment company owned by Coker Jr.'s father, Peter Coker Sr.
Patten also had wrestled in high school with Morina, the major Hometown International shareholder and its former CEO. His LinkedIn profile lists him as manager of the Mantua Creek Group, a partnership in which Morina is a member, and which leases space to the Paulsboro deli.
Patten also is barred by FINRA, the broker-dealer regulator, from acting as a stockbroker or associating with broker-dealers, according to the regulator's database.
He previously was the subject of repeated disciplinary actions by FINRA, which included not complying with an arbitration award of more than $753,000 for violating securities laws, unauthorized trading and churning a client's account.
Coker Jr.'s father, Peter Coker Sr., is listed as owning 1.3 million shares of Hometown International. Coker Sr. and his business partner in Tryon Capital, Peter Reichard, control another entity, Europa Capital Investments, which is listed as owning nearly 2 million shares of the deli owner.
Coker Sr. previously has been sued for allegedly hiding money from creditors and alleged business-related fraud. He has denied wrongdoing in those cases, one of which was settled out of court in recent years in North Carolina.
In August 1992, the then-49-year-old Coker Sr. was arrested in Allentown, Pa. and charged "with prostitution and other offenses after he allegedly exposed himself" to three underage girls as he drove around Central School," The Morning Call reported at the time. Records detailing the outcome of that case are not publicly available.
Coker Sr. was arrested in North Carolina in 2010, on a charge of soliciting a prostitute.
Reichard in 2011 entered a plea in a criminal case that led to his conviction for a scheme to illegally contribute thousands of dollars to the successful 2008 campaign for North Carolina governor of Bev Perdue, a Democrat.
The scheme involved the use of a bogus consulting contract between Tryon Capital Ventures and a fast-food franchisee who wanted to support Perdue. Coker Sr. was not charged in that case.
CNBC last year detailed that Tryon Capital was being paid thousands of dollars per month for consulting by both Hometown International and the related shell company, E-Waste. Both of those companies terminated those consulting contracts on the heels of that reporting.