April 01, 2022
An unassuming deli in Paulsboro is somehow the sole asset of a publicly traded company valued at over $100 million. Now, that corporation will merge with a sustainable plastics manufacturer.
Hometown International will join forces with Makamer, a private California-based firm that makes biodegradable plastics out of materials like hemp, at some point in the next few weeks, according to Securities and Exchange Commission filings.
But the Hometown Deli at 541 Mantua Ave. won't be operated by the new company and it's unclear if the sandwich joint will remain open, the Courier Post reports.
The deli has never been a big earner for the Hometown, which has been publicly traded since 2019 and has fewer than 60 shareholders, CNBC reports. The storefront clocked just $25,000 in sales last year while the company lost more than $480,000.
The SEC has in the past accused Hometown of being a shell company, one that doesn't conduct any meaningful business operations or have significant assets. The firm denied this by pointing to its ownership of the deli.
But merging with another firm has been a long-term goal for Hometown, according to SEC filings. The company received $2.5 million from investors in April 2020 to find a suitable partner.
"Proceeds… would be used to seek out other business opportunities, and if approved by the Company’s Board of Directors, to engage in a business combination with a private entity whose business presents an opportunity to create value for the Company’s shareholders," the documents say.
That plan aligns with what Makamer hopes to do.
Alex Mond, the company's president, told CNBC Hometown was an attractive candidate for a merger because he wants his company, which is currently private, to be publicly traded.
He eventually plans to move the company from the over-the-counter markets it's currently in to the more centralized Nasdaq exchange, where it would attract more investors.
Mond said he and his team at Makamer will run the merged company without any of Hometown's current leadership, even though many involved with the business hoped they would be offered a job.
Hometown first came to the media's attention in April 2021 when hedge fund manager David Einhorn warned investors to steer clear of the company given the gap between its profits and valuation. "The pastrami must be amazing," he joked.
Reporters then did a deep dive into the company's complicated history. In the wake of the reports, Hometown actually disavowed the company's publicly quoted stock prices to the SEC, a rare move for a publicly traded company, noting that there was no basis for such a high valuation.
It's still unclear how the company's current shareholders would be impacted by the merger.
Current CEO Peter Coker, Jr., a Hong Kong-based investor, told CNBC "more details will follow shortly."
One of those shareholders is Paul Morina, a high school principal and wrestling coach in Paulsboro who was also formerly Hometown's CEO. He still owns 31.5 million shares of the company, which were worth $14 each on Friday afternoon.
But Hometown's largest shareholder is a mysterious group of investment firms based in Macau, China, CNBC reports.
The company was incorporated in Nevada in 2014 and opened the deli the following year.