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Odyssey's goal: Raise coins and stock price

Published June 21, 2004

TAMPA - There are treasures worth billions of dollars on the oceans' floors, Greg Stemm says. To find your share, all you need is precise research and the right equipment.

And about 12 years.

For much of that time, Odyssey Marine Exploration Inc. suffered the indignities of perceived failure. The Tampa company spent millions of dollars trolling the globe's deepest seas for sunken treasure, without success. At one time, its stock could be had for a nickel a share.

Starved for money, the company took loans from co-founders Stemm and John Morris. It paid some contractors in shares of stock. It sold millions of shares more for a song to investors who were wealthy or gamblers or a little of both. To preserve cash, it skipped annual shareholders' meetings.

All that changed last summer, when Odyssey's search vessel finally homed in on a Civil War-era wreck thought to have sunk with a cargo of thousands of gold coins.

Suddenly, two executives whose primary business challenge to date had been avoiding bankruptcy were given an opportunity to cash in on one of the biggest numismatic events in years.

They haven't disappointed. With masterful skill, Odyssey's founders have cultivated a storm of media coverage, a dream team of coin experts and a marketable product - historically significant coins - they hope will keep their search boat afloat for years to come.

In May alone, the publicly traded company took in more than $3-million from initial sales of coins it recovered from the S.S. Republic. Not enough to tempt Leonardo DiCaprio into filming Titanic II, perhaps, but 10 times as much money as Odyssey took in during the prior 10 years combined.

"We knew that if we could just stick it out long enough, we could prove that a real business existed," Stemm says.

"This is a very big thing in the numismatic world," says Chris Cipoletti, executive director of the American Numismatic Association, a nonprofit membership organization for coin collectors.

The salvage of the Republic, located about 100 miles off the Georgia coast and some 1,700 feet beneath the Atlantic's surface, is not complete. But Odyssey's crew has discovered items of value. Among the more than 51,000 coins recovered at last report were several thousand $10 or $20 gold coins, including a particularly rare 1854 specimen for which the company says it has turned down a $450,000 offer.

In many cases, the salt water and lack of handling left Republic's gold coins in better condition than their earthbound counterparts.

Of far less interest to traditional coin collectors are the more than 47,000 silver half-dollars found so far. Because silver is porous, company officials say, many of these coins show the wear and tear of 138 years undersea. Under an electron microscope, some even display coral and other organisms.

Shrewdly, Odyssey's team decided to turn a negative into a positive by marketing the coins as historical relics - the Republic sank in a hurricane while en route from New York to New Orleans on a post-war reconstruction mission - to noncollectors. Thousands have been packaged in handsome wood cases and sold since May for $1,000 to $2,000 apiece via cable TV's Shop at Home Network and through conventional coin retailers.

But "the gold coins are where the big money's going to be," says Steve Carnow, general manager of Swiss America Trading Corp. of Phoenix, one of the half-dollars' distributors. "They could be worth upwards of well over $10,000 per coin."

John Albanese, a New Jersey coin marketing consultant Odyssey hired in February, estimated the retail value of the more than 51,000 coins at more than $75-million. That figure could climb higher if the company finds more coins on the Republic.

Odyssey won't rest its future on the coin sales alone. Entertainment experts, historians and archaeologists it hired are developing traveling and permanent exhibits of Republic memorabilia, a strategy that helped Titanic's owners draw thousands of customers to St. Petersburg's Florida International Museum in the 1990s.

Not that Odyssey's cash-flow problems are forever solved. Recovering, conserving, grading, marketing and auctioning its remaining coins will take time. For short-term cash needs, the company plans to close on a $5-million line of credit this month with the Bank of Tampa, using $20-million worth of gold coins as collateral.

For the long term, there is the challenge of boosting Odyssey's stock price, which rose to nearly $7 over the past year but closed Friday at $3.34 per share, up 7 cents.

One problem: share dilution. In the 12 months ended April 30, the number of Odyssey shares ballooned 31 percent to 38-million, thanks to the exercise of warrants and stock options ladled out over the lean years to investors and employees.

Another problem, spokeswoman Laura Lionetti Barton says, is that Odyssey's business type is unusual for a publicly traded company. "We don't fit any traditional mold," she says. "Also, since we have not issued any financial statements that show significant revenue, we haven't had the traditional "benchmark' numbers that people look for."

On Tuesday, Odyssey will have a rare chance to boost its financial reputation at a ThinkEquity Partners LLC event in Chicago. CEOs from 28 small, public companies will tout their businesses to mutual fund managers and stock analysts there.

Meanwhile, Odyssey's search vessel is cruising the eastern seaboard for other likely shipwrecks. Later in 2004, its recovery ship will travel to the Mediterranean to begin salvaging a wreck thought to be a British warship that sank with up to $1-billion worth of coins in 1694. Odyssey would share proceeds of the find with the British government, with whom it engaged in an arduous legal, political and contractual battle.

Can Odyssey strike gold twice? Stemm, who along with Morris received a substantial bonus and salary hike this year, is sure of it.

"Our next step," he says, "is to help people understand that this isn't a one-shipwreck company."

- Scott Barancik can be reached at or 727 893-8751.

[Last modified June 19, 2004, 17:29:04]

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