Changing the rules yet again…

Nearly two months ago, I wrote about how Penn Octane (POCC) had changed the terms on a $3.19 million loan to its former Chairman and CEO, Jerome Richter. Under an earlier agreement, the loan was to be forgiven if the stock price hovered around $6.20 for 90 days. Since I wrote this, the stock, which at the time was trading at around 60 cents a share, has continued to fall. The second change extended the loan for another two years and cut the balance in half, which at least on the face of it, seems to go against SOX rules on making any amendments to an existing loan.

But yesterday, in this exhibit to the late Q that it filed (the fourth late filing since the beginning of the year), Penn Octane seems to have changed the terms yet again. This time around, the loan is back up to $3.19 million, but Richter has the ability to reduce the balance by providing consulting services to the company.

The whole thing seems more than a bit confusing in light of the multiple revisions to the loan and given that Richter owns 25% of Penn’s outstanding stock. Indeed, it’s not really clear why he needs to take the same work-study approach that got me through college to pay off this loan.