Leading Brands, Inc. (LBIX)

[NewJerichoMan]

The sale closing is nigh!

Leading Brands, Inc. (NASDAQ:LBIX), announces that it has entered into a binding agreement to sell its Edmonton bottling plant land and building. The transaction is for all cash on closing and is scheduled to complete on February 1, 2017. No other terms were disclosed.

Company has a market cap right now of ~$4.5M. It's a diminishing business, albeit with a relatively clean balance sheet, nearing an inflexion point of a potential turnaround.

Did some research. In the area where the hot fill bottling plant is located, industrial properties go for ~$120 per foot. Simple math: ~50,000 * ~$120 = $6M. Let's say they were a distressed seller (reasonable assumption) and sold for a 20% discount: ~50K * $100 per square = $5M in proceeds. After that, they have to sell off all that specialized equipment because I doubt they could sell the entire property as a "going concern". They won't get much for the equipment (pennies on the dollar) but they'll get a few shekels (might cover all the selling fees). Even if they only net $5M, that's still more than their current market cap.

The float is far too small (on the NAZ at least) to get any real investment. So, it's always going to perform like a terrible stock (undervalued). But the market is valuing this stock like the company is bankrupt. And that's where a potential payoff comes in.

We don't know what they'll use those proceeds for but given the company has purchased no less than 40,000 shares per year for the last several years (53K shares last quarter), they have a solid track record of being shareholder-friendly.

I think a decent case can be made for price bumps either on January 14thish (3rd quarter results announcement / expecting positive news on Happy Water sales) and/or February 1st sale closing presser ($5M walking in the door is bully for a $4.5M market cap stock). Given the small float and illiquidity of the stock, it won't take much to push this to double its current price (~$1.60).