From the Ibox (why the PPS Declined)
On October 17th HEMA filed a 8-k form with the SEC stating that the company was defaulting on notes related to the acquisition of Teragenix/HemaBio. HemaBio was apparently loosing money and HemaCare was setting up the closing of HemaBio. At that time pps fell to .80, then the fun began. Praetorian Capital Offshore hedgefund which owned 1.2M shares decided to exit their position dumping their shares into the market and bringing the pps down to .26. Just as the charts were lining up for a rebound the company submitted another 8-k filing. This time they announced that HemaBio was closed and pps dropped on 11/8 to a low of .13 and closed at .19.
The notes in default are secured by assets of HemaBio - so what closing it anyways.
HemaCare is cleaning up thier business and eliminating the failing division which they paid too much for. By default, the debt for the notes will be removed as the note holders put claim on the HemaBio assets. Wait it gets better, those notes are subordinate to the Bank to which HemaCare has a credit line established with. Thus, HemaCare is woring with Comercia bank to close HemaBio's failing division.
Outcome: As stated in the 8-k filings HemaCare has nonrecurring restructuring charges which will be recognized in Q3 and Q4 07. Clearing the way to higher profitability in 2008.
Do the math, company market cap is only 1.67M as of close 11/8. It was as high as 29M earlier this year and 11.5M early October. The compay is restructuring for higher profitability and is set to continue operations.
WHAT NOW? Well the fundamentals of the company haven't changed this week, they had 36.4M in Revenue 2006 and were on track as of last qtr to beat that number. Book value is 1.13pps.
Praetorian Capital
Offshore Hedge fund. Held 1.2M shares purchased in 2006 with an average pps over 2.00.
May 2007 sold 5,000
10/18 sold 130k
10/19 sold 130k
10/22 sold 77,100
10/23 sold 140k
As of 10/23 still held 792,900 shares
10/30 sold 5k for .342
10/31 sold 240k for .3084 share remaning 547,900
Since our last Form 13G filing dated October 19, 2007, through
the date of this filing, the Funds made the following
transactions:
November 1, 2007 sold 117,500 shares
November 2, 2007 sold 80,000 shares
November 5, 2007 sold 35,000 shares
November 6, 2007 sold 10,000 shares
November 7, 2007 sold 47,500 shares
November 8, 2007 sold 257,900 shares
Since we no longer own more than 5% of the shares of the issuer,
no further Form 13G filings will be made unless we are one again
required to do so.
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