SEC Stops Investco Trading as Probe Opens on Financials

The Securities and Exchange Commission halted trading of Investco's stock April 29 after opening an investigation into the company's financials. Trading is scheduled to be resumed May 10.

The SEC order says the suspension was handed down because "questions have been raised (by the SEC) about the accuracy of publicly disseminated information concerning, among other things, the company's assets, the company's business combinations, the company's current financial condition and a tender offer for Investco's outstanding shares."

Joseph Lents, Investco's CEO, didn't return a phone call and e-mail message from GlobeSt.com Tuesday asking for comment on the 12-day suspension.

The April 29 suspension order follows an April 5 prepared statement from Lents announcing a pending merger with American Leisure Inc. of Orlando. American Leisure is a holding company of various travel, hotel and resort development firms.

Terms of the tender offer weren't disclosed but Lents says in the statement, "This merger allows Investco to increase its total assets to approximately $200 million and begin recording revenue and earnings immediately."

An undisclosed amount of cash and convertible stock was supposed to be part of the initial contract. But the statement says American Leisure "has agreed not to have this preferred stock included in the tender offer that is in place."

American Leisure chairman Malcolm Wright says in the same statement his company is eager to join Investco "to build a large and very profitable financial services, travel and resort real estate company."

Wright says the combined revenue of the two companies for fiscal 2001 were $17 million, with a net income of $1 million. "We believe that this revenue can be increased significantly over the next two to three years through a combined effort," he says. "We think that we can best accomplish this by acquiring and operating resort real estate assets in multiple locations and operate them as hotels and vacation ownership properties."

The merged companies would fall under the Investco banner and expand later into providing travel related services, Wright says. He founded American Leisure in 1998 as a holding company for travel and resort real estate development companies.

Investco, formerly Intraco Systems, was founded in 1980. The company exchanged convertible preferred stock for $15 million of Anglo American plc stock in 1980. Investco is using these assets to offer financial guarantees and various financial services products to companies and accredited investors, the statement says.

The company's latest acquisition was March 14 of this year when it bought Mercury Surety and Insurance Co. for an undisclosed sum. The deal added $100 million it Investco's shareholder equity base through the issue of a new series of convertible preferred stock, convertible into common stock at $5 per share, according to the statement.