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I thought the CEO had been buying recently? :)
7000 shares.
For whatever it's worth:
https://www.investopedia.com/terms/o/obsf.asp#:~:text=Off%2Dbalance%20sheet%20financing%20is%20an%20accounting%20practice%20where%20companies,of%20covenants%20from%20being%20breached.
Key takeaway:
"Although it sounds sketchy, off-balance sheet financing is a legitimate and very legal practice."
Well, it should be said that there is no solid basis for ascribing any value to the preferred shares.
They may be worth something or not. If ever the company manages to distribute them, we may possibly learn what they actually represent. Until then, we simply do not know.
And 3.600 for me.
Gratulerer med dagen, snow!!!
Thanks for organising the survey! I suspect that the other owners, like me, bought their shares on lower price levels and keep them as an option.
Thanks! This is very interesting, but the fact that it's more important to be rich than than to be knowledgeable if you want to become a judge is not really ideal from the point of view of the rule of law, I think.
And it certainly offers an explanation why the initial position of the judge - which was described in one initiated comment on Seeking Alpha as "completely lawless" - was so completely reversed later. Presumably he consulted someone who actually knew the law in the meantime.
Thanks! Having read through the judgment, I think we can now narow down the potential outcome in time and magnitude.
As far as I understand, the settlement is now approved and the proceeds will be distributed to those eligible shareholders who own Class A shares or ADS as of the Record Date. The Record Date is defined as, basically, as soon as possible after the Effective Date, which in turn is defined as the first date on which approval of the Settlement by the Court has become Final.
Once the specific date of the Record Date is determined, Renren shall file a Form 6-K and publicly announce that date.
It turns out that the judge did not budge from his position stated in April, namely that 17.5% would be the upper limit of lawyer fees acceptable. This translates into a fee for the Plaintiff's counsel of 52.5 MUSD out of the 300 MUSD of the settlement.
Moreover, the judgment accepts to lawyers' fees for the Shareholder Coalition Counsel of 277 kUSD (rounded down to 275 kUSD in the actual order), but rejects a request for 96 kUSD from the CRMC counsel. A total administrative fee of 166 kUSD plus a possible buffer of 25 kUSD is also approved.
And that seems to be it.
Two uncertain factors remain. First, the administrative fee buffer may not be (fully) used, and the judge can later accept to increase it, but I presume the effect of this will not be material.
Of more concerns is a pending request from Renren itself to be compensated for its legal fees; the amount ranges from 2.2 MUSD to 3 MUSD.
It is reasonable to assume that the number of eligible ADS will be close to 7.754.623 (Z), see my earlier posts.
Putting all of this together, we obtain a per-ADS compensation of at most:
(300 MUSD - 52.5 MUSD - 277 kUSD - 166 kUSD) / Z = 31.86 USD.
In a negative scenario, where Renren would be granted the 3 MUSD it seeks and the administrative fee would exceed the buffer and amount to, say, 300 kUSD), the payout becomes 31.46 USD per share.
So it seems there is still some money on the table at the current share price level.
Thanks!!
I can provide some of that missing information.
As a reminder, following the settlement approved on 13 October 2020 by the Court, over the objection of one shareholder, the plaintiffs filed a new complaint on November 8 2021, alleging that Solomon and the other defendants had not fulfilled their part of the agreement. In that framework, they filed a motion to appoint a receiver over SIAF.
Subsequently, and because of legal considerations that I do not care sufficiently about to try to understand fully, this motion was refiled as part of the initial lawsuit (the one which ended in the settlement). The new complaint was put on hold while the refiled - thereby reopened - lawsuit played out.
The judge has now rejected this refiled motion, interestingly enough echoing the concerns of the lone objecting shareholder:
"...many of the remaining terms appear to be no more than agreements to agree, which, assuming they are even enforceable, pose serious difficulties for a party seeking to establish noncompliance."
"At bottom, the problem is that Plaintiffs’ motion is not really intended to enforce the terms of the settlement agreement at all. Instead, Plaintiffs contend that there are ongoing institutional failures at SIAF that the settlement agreement has failed to correct. But many of these institutional failures predated the parties’ settlement. And, in any event, Plaintiffs are bound by the settlement to which they agreed."
Thanks for flagging this new document. Indeed, we seem to be heading for a settlement approval on June 8th and a distribution of at least 29 USD, but quite likely somewhat more.
The legal counsel's memorandum of May 13th (doc 1022) argues that 22.5% would be a suitable fee instead of the 33% initially sought; it is furthermore stated that this would give rise to a distribution of 29.98 USD per ADS before expenses.
Incidentally, calculating backwards from this distributed amount of 232.5 MUSD after the 22.5% cut gives a number of ADS entitled to take part of the distribution of ((232.5 MUSD / 29.98 USD = ) 7.755.170 ADS, quite close to the number Z of my earlier posts.
Now, in the hearing of April 14th, the judge stated that 17.5% would be the upper limit where too much would be attributed to the legal council as fees. So we will end up somewhere between 17.5% and 22.5%.
It is possibly a coincidence that the round number 20% lies exactly at the mid-point of this interval, but on the other hand, one should never underestimate the attraction of round numbers.
Assuming that the judge would draw the line at 20%, the distribution would increase by almost one dollar compared to the 22.5% scenario; this takes us to almost 31 USD per ADS before fees and more than 30 USD net of fees and expenses.
Thanks for this alert.
The most interesting facts I found among these filings is that the Plaintiff's law firms now argue for a significant lower fee: 22.5% of the total, instead of the 33% that they sought initially.
Furthermore, they provide an interesting quantified assessment of the outcome, should the settlement and this fee be approved:
Here, by contrast, distributions to Renren Shareholders, net of a 22.5% fee, will far exceed the value of their investments in Renren during the relevant period. Given the minimum per ADS distribution under the defined “Settlement Amount,” the distribution net of fees and expenses will exceed $29 per ADS (and will be $29.98 per ADS, before expenses).
...the upper limit of where we would start to be allocating too much settlement proceeds to the lawyers such that it would be unfair would be 17-and-a-half percent or 52-and-a-half million dollars. That's where I think the range is.
Dear downthehatch,
thanks for drawing my attention to the new developments. I went to have a look on the web site, and the latest filings are intriguing.
The most interesting part is, in my view, the transcript from a hearing on April 14th (incidentally :) the day when the share price took off), from which I quote the following statements from the judge (my emphasis added):
"I understand that there are going to be some objections...But I'm prepared to, understanding what those objections are now and having reviewed them, I'm prepared to approve the settlement over those objections."
"The settlement agreement will provide for distribution of the settlement to the coalition shareholders based on their current holdings."
"They [the plaintiff's lawyers] asked me to think about it [the legal fee], and I have. I spent last night, most of the night, thinking about it. And I think that the upper limit of where we would start to be allocating to much settlement proceeds to the lawyers...would be...52-and-a-half million dollars."
"...we know that certain of the shareholders who have standing, who conflate standing with right to recovery, will want to go to the Appellate Division, and may. And I would like to reduce the potential issues so that the only issue that the Appelate Division is looking at is...that they're entitled to recovery based on what they held at the record date, which is simply not tenable as a matter of law."
Very strange behaviour. For the last four hours, the stock has hammered against the 29 USD level, without ever reaching it. It stood at 28.99 for long periods. I wonder why this is.
In the meantime I've searched the First Department - Appellate Division for any clue, but I find no mention of RENN since 2021. So that seems to be a false trail, unless I've simply missed the info.
Thanks! Given today's movement, I think that the market suddenly considers an approved settlement a lot more likely.
Now, the signature WolfCapital (who seems very knowledgeable to me) on Seeking Alpha said already in a comment in end-December that the appeal would probably be heard by the First Department in spring, probably April, followed by a ruling probably in June.
Maybe today's movement has something to do with this?
In our series of legal exchanges on SIAF's future, below the most recent document submitted; this time from the plaintiffs in support of the motion of receivership:
https://mega.nz/file/xo0VlArZ#Tai64OXcLp34fBBlt4Eav68cVgoaBFSSgNaUUHbgV94
https://mega.nz/file/El9HRYDK#gBVAzxZ-S1UGogL10EFSaZsQsqAB040FWFFlOGF0CgA
https://mega.nz/file/R8s3wSjI#3bzCZ69qDupBFZf85ABZz6GQ1vmkjLMzoFGGdBmxOGI
https://mega.nz/file/R9sDSYDD#SKY8zj3ts-W5y9m1Gc2SJbQYwcYEJdO3wFjValY8xcI
https://mega.nz/file/8slHjYpK#AqBuKqFElKWuf5og3McBEWEEal1luMFFgGK-_IjXk8I
https://mega.nz/file/88lhjQLa#uKTnppwaB3vVgV7bXIFYFRZF1Bb-fnMVYqKhUajcenA
Happy reading.
The article explains that the judge Borrok, at a status conference today, said that he would approve a settlement which would give some 40-50 MUSD less to the plaintiffs' lawyers and allocate that amount to the former shareholders instead.
"The judge confirmed that the remainder would go to current shareholders - about $199 million – net of our fees."
The article concludes that the reasonably likely downside for current RENN shareholders would now be a $25.80 distribution before the end of this year which is the per share value of the $199 million net settlement, and ends by stating that the share has several dollars of remaining value.
Possibly the judge understood in the meantime that his previous decision had no basis in law, and now tries to save face.
Thank you very much for sharing!! Very interesting!!
SIAF's Defence
An attentive board member recently drew my attention to the fact that SIAF has posted its objections to the motion introduced by the plaintiffs. Below links to the documents for the interested; this time using a file-sharing site which can show the documents directly on screen.
Next step would be the Plaintiffs’ reply on the Motion, which shall be due by no later than January 19.
Main defence
https://mega.nz/file/El0ykQKT#3z60nYqpsPcg-3P0k00gew9_i1fqtbJNolJ1c8FWOHI
Solomon's declaration.
https://mega.nz/file/Eg0SRA5J#EfsSGzprUZDwda8Czg1fSwV9MpgAiolKRdp-u-FgdWo
Ravindran's Declaration
https://mega.nz/file/Vw0kiYBR#-np7ZTsCH7RD4oGbni9jZ_-jO8KdLuKhLApsMSlwgu4
Rashid's Declaration
https://mega.nz/file/Bh1SHI6S#oYQMkmRbkWr0_iC8bVQ4t4A2K6b44RYAFxWiXNm_9x8
Ming's Declaration
https://mega.nz/file/l8t0wSbA#phF6kTd2gzbQF8V9x4A5BLzN5_Ml9uO1iaECN1xJ61Y
Cheung's Declaration
https://mega.nz/file/Fwt2GATJ#dNXni1-0DeN31Oxd-5OytGRpB-1LUXKOQ4cJ7ar57N0
Biller's Declaration
https://mega.nz/file/VxlQGQSR#PYe3XUcdn1xbs5arWId37A5_SmXk-oOwkJcH3rW8PnQ
Happy New Year, dear fellow shareholders! And the best of luck to all of us!
Complicated indeed. Now, a few days ago, Renren issued its non-audited H1 results, which brought some additional clarity:
https://www.prnewswire.com/news-releases/renren-announces-unaudited-first-half-2021-financial-results-301451677.html
The Company completed its deconsolidation of Kaixin on June 25, 2021 through Kaixin's reverse acquisition of Haitaoche Limited ("Haitaoche"). Upon completion of the reverse acquisition, the Company's ownership interest in Kaixin decreased from 69.4% as of December 31, 2020 to 33.3% as of June 30, 2021
I do not think so. I've read at several occasions that RENN divested its interest in Kaixin end-2020.
https://techonomy.com/2021/08/sofi-battle-wont-go-away/
Ninth paragraph.
Dear downthehatch,
thank you very much for this thorough and clear analysis of the situation at hand. From my vantage point, it seems exceedingly difficult for the plaintiffs to come up with an alternative settlement which would both satisfy the judge's insistence on using a 2018 record date and secure a decent payoff for themselves, because I believe that they mainly acquired their shares after 2018.
Hence, I agree an appeal seems to be the most likely outcome. Now, sorry to yet again demonstrate my limited knowledge of the American legal system: I understand that an appeal would be heard by an appelate court, which would focus on the possible errors in the judge's interpretation of the law. Would you know what the timing for such an appeal process would be, and what outcomes are possible?
Thank you very much in advance.
P.S. In the unlikely event that you haven't seen it, here a link to the judge's decision:
https://filedropper.com/d/s/Bi7NQmvwMdv3NmuPvWXsbaeQgSjkpW
NB: this is an open file sharing service and as such filled with malware that other people upload, so you will get a warning when you click on the link. However, the link I have posted leads only to a pdf file. I have by the way recently used the same service to post files to the SIAF board.
"Chrysanthemis" from your experience - How can we arrange / agree with the court so we the shareholders will get the the updated info / reports from the temp. Receiver?
The Receiver shall file audited and update financial disclosures with SEC and give updates to the Company ´s board, shareholders including Plaintiffs, and the Company's major creditors
Here you go. Note that I do not have one of the declarations, because it ran to several hundred pages.
https://filedropper.com/d/s/dQOVO4t9uVPPF82eAlXqC0Eh5z5iHu
https://filedropper.com/d/s/hl300PqUFR3SxNhqPAhJsztxTt9EF6
https://filedropper.com/d/s/8TaveY10M1RnOcowzR2ifWa2DMyhdx
https://filedropper.com/d/s/Z2xsLDZUJVZusMOUXXeZtoW801VKVw
https://filedropper.com/d/s/axxlbONLKraDGYiE5QmwBtqjo6OWoA
https://filedropper.com/d/s/DiwTNKlj2fph28eZtpK80tgb3nDXNh
https://filedropper.com/d/s/TxDiQq29cbXfMhgKsmVKn1NKNPndEz
This is a free file-sharing site which, like all such sites, contain massive quantities of malware so you will likely get an angry warning when you click on one of the links above. But there is nothing but pdf files behind the links.
This was somewhat unexpected. How probable do you think it is that there won't be any settlement?
Now let's consider the number 7.754.623.
This is an interesting number, which I think explains quite well why the price of a Renren ADS oscillates in a narrow band just above 25 USD.
7.754.623, which I will call Z below for brevity, is simply the minimum 300 MUSD settlement amount divided by the approximate 38.7 that the defendants have to pay for each ADS held by a non-defendant.
Now, I would predict that, if the settlement is approved as proposed, the records are going to show that the non-defendants will hold Z ADS's (or something very close) on the record date.
Because this is the optimal number of ADS's that the defendants would want non-defendant shareholders to hold on the record date in order to minimise their losses.
By definition, if the non-defendants hold Z ADS's at the record date, the defendants will have to pay 300 MUSD, which is the least they can get away with.
Assume now that the number of ADS held by non-defendants currently is superior to Z.
Then the defendants have a very strong incentive to buy ADS's at the current 25 USD. Because for each ADS they buy for 25 USD, they avoid paying 38.7 USD later.
Assume now that the number of ADS currently held by non-defendants is inferior to Z.
Then the defendants have a very strong incentive to sell ADS's at the current 25 USD. Because they will anyway have to pay the minimum 300 MUSD stipulated in the settlement as long as the non-defendants own less ADS than Z, and each ADS that the defendants sell now for 25 USD can probably be picked up after the record date for only a few dollars, at most.
On this basis and assuming that the settlement will be approved as proposed, we see that the defendants will buy or sell shares to make non-defendants own Z ADS's on the record date, and the payment for each ADS will be at least:
300 MUSD - 100 MUSD (33% attorney's fees) - 950 kMUSD (costs and expenses) - perhaps 2 MUSD of other administrative costs
divided by Z.
This computes to 25.41 USD, and if the settlement will be approved, this should be the very minimum paid out.
Now, there is clearly an upside to this amount, because if the judge awards less than 100 MUSD of attorney's fees or the remainder of RENN actually is worth something, the gain will be higher. But 25.4 ought to be the floor.
A final thought: if non-defendants currently hold a number of ADS's significantly different from Z, we may see quite some movements before the record date - upwards with a limit of 38,7 if the non-defendants hold too many shares and downwards with a limit of 2-3 USD in case they hold too few (from the defendants' perspective).
But the large number of ADS's that changed hands when the settlement was announced would possibly have allowed the defendants to optimise their ownership without any problems, unless there are some restrictions for some reasons which stops them from buying or selling.
Sorry! It's a pity you had to read through all that - I edited the post within the 15 minutes to add the page with the 33%, but you had apparently already opened the post.
Though I have little experience of legal procedures, 100 MUSD also seems very much to me.
Another question: how long could we expect to have to wait for the judge to issue the scheduling order?
I have been digging around, in particular on Seeking Alpha, and the main reason why the stock is not trading higher is that in the version of the settlement published on the NY court website, the attorneys' fees were set at a maximum of 33% of the settlement amount, plus costs (page 61, point 6, second paragraph):
https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=48WNUe//xXJs6bnjh0GyJQ==&system=prod
This percentage (which does not figure in the version filed with the SEC) has been taken by the investor community to mean that the actual fees will be 33%, translating into a payment per ADS of 25.8 minus costs and administrative fees.
The question is how probable a 100 MUSD attorneys' fee would be in this case?
Any views?
Thanks! I still do not understand why the price gravitates so strongly towards 25 USD.
The only explanation I find is embarrassingly simplistic, apart from the fact that it is wrong or unconfirmed in every detail:
1. The settlement is worth 300 MUSD.
2. There are 24 million outstanding ADRs.
3. Half of them belong to defendants and are not entitled to compensation.
4. 300/12 = 25.
Any other ideas? Possibly my imagination isn't powerful enough.
P. S. the "analysis" provided by Motley Fool made me think that they merit their name over there.
Thank you - the legal and administrative costs were indeed part of the information I was missing. For the record, and to serve as food for thought for other forum dwellers, below my thoughts on the current share price.
In somma, as I read the settlement, the ADS may currently be spectacularly underpriced, despite its recent surge. And we do not need to dig further into the settlement than its fourth page - here a link for easy reference:
https://ir.renren-inc.com/static-files/9ce86392-176c-4ca3-a287-98a2ffb5f0a5
I have entered some line breaks in the quote below to make things clearer, at least for myself:
"In connection with the Settlement, the Defendants will create a common settlement fund (the “Settlement Fund”), which amount, before any reductions for Settlement Fund Expenses (as defined below), will be the greater of
$300,000,000
or the sum of
(a) $38.6866 per ADS (as defined below) multiplied by the number of issued and outstanding ADSs held by Renren Shareholders as of the Record Date (as defined below)
and
(b) $0.859701 per Class A ordinary share multiplied by the total number of issued and outstanding Class A ordinary shares held by Renren Shareholders as of the Record Date.
“Settlement Fund Expenses” include:
(i) any taxes payable on any income generated by the Settlement Fund;
(ii) notice costs, distribution costs, and administration expenses;
(iii) any attorneys’ fees and expenses awarded by the Court to the Plaintiffs’ counsel;
(iv) any other fees and expenses awarded by the court; and
(v) any administrator fees associated with the Settlement.
Renren Shareholders, defined as holders of Renren’s Class A ordinary shares and American depositary shares (“ADSs”), each currently representing 45 (sic!) Class A ordinary shares, as of the Record Date but excluding the Defendants and D&O Releasees (as defined below) will be entitled to receive a pro rata share of the Settlement Fund, after deducting the Settlement Fund Expenses. “D&O Releasees” are individuals that served as Renren directors and/or officers in June, 2018 and specifically identified as D&O Releasees in the Stipulation."
The Administrator shall pay or direct the payment to each of the record shareholders as of the Record Date, excluding the Defendants and D&O Releasees, such record shareholder’s pro rata portion of the Net Settlement Amount, which shall be not less than the amount of $0.859701 per share - or $0.826746, if, as set forth below in Section F, Duff & Phelps does not pay the Duff &Phelps Contribution thereby triggering the modification of the True Up definition as set forth in paragraph 4 — before any reductions for Settlement Fund Expenses.
Curiouser and curiouser! cried Alice.
I still fail to understand why the ADR is currently traded at 24 USD.
Still trying to assess the value of the settlement. Two more intriguing jigsaws:
1. The ADS, both according to the settlement text and this SEC filing, currently represent 45 shares of ordinary Renren shares, not 15.
http://edgar.secdatabase.com/1952/110465919071845/filing-main.htm
The amount to be paid into the settlement fund is around 38.7 USD per ADS and around 0.86 USD per ordinary A share.
The ADS and ordinary shares held by defendants do not count and they are not entitled to any part of the payout.
2. The settlement contains provisions for a situation when Duff&Phelps will not pay, in which case the minimum 300 MUSD amount will be reduced to 288.5 MUSD.
Dear downthehatch,
First a very big thanks to you for drawing my attention to this stock. I bought shares at 9.03 so I've more than doubled that money, much thanks to you.
Now, thinking about what the settlement can be worth, I remember you writing that 49% of the stock is held by insiders (in April, though). From what I understand, the settlement provides for a cash payment to the minority shareholders only, not to insiders.
Thus, with 24 M shares outstanding (iHub's figure) the minority owns some 12 M shares. Then the settlement should be worth at least 25 USD per share, which at current levels ascribes a negative value to RENN.
This seems strangely low. What do you think; do I miss something in my back-of-the envelope calculation?
Thanks for this! Very helpful!
Yes, these last two months have been a true joy.
Wonder what's behind the movement, I haven't seen any news at all.
How do you know this?