Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
A transaction is the only catalyst I see to move the share price. This is dead money until then. While CBAI may well be financially viable and stable now, operations aren't going to drive a share price increase. Anything is possible, but betting that Red Oak can drive the share price up now is a bad bet IMO. Of course, a buyer may resurface and a transaction could still be announced in the coming months.
No transaction. Not good. A little surprising as it's not clear how Red Oak gets liquid in the foreseeable future. Perhaps there's a buyer pending and this is just a form of negotiation?
GV--Skillz-- What might be a good reentry price in terms of technical support? It traded down to 5.15 this morning before bouncing back some.
Despite my recent PSL picks, I don't come close to qualifying for subsidies but instead get hit with Medicare Tax on Investment Income (3.8% over $250k AGI as I file joint return). So, all in, Obamacare is more expensive for me too even though my premiums declined. My back surgery really spiked my premiums prior to Obamacare as backs can be tricky to fix and can run up medical expenses. Fortunately, mine has been fine since my surgery.
It sounds like you're relatively young and healthy Cliff, a cohort which has been "taxed" under Obamacare for the benefit of the older, sicker cohort. I'm 63, fit and healthy, but do take blood pressure medication and had back surgery after an accident. My rate came down after Obamacare which doesn't make it good, right or fair. While older people are more likely to vote Republican than younger people, they're also more likely to benefit financially from Obamacare especially if they're not in an income bracket that triggers extra income tax.
My own political views aside, it doen't make objective sense to me that conservative Republicans didn't support the bill. It lowered government cost very significantly compared to Obamacare. Of course, they would have preferred a full repeal but also know the votes aren't there for that either in the House or Senate. Why not take a bite out of Obamacare now and try to continue to chip away going forward? Makes me think the healthcare industry overall likes the increased coverage and spending under Obamacare and was lobbying heavily against the bill. It could also be, even in conservative districts, that there was as much constituent pressure to oppose the bill as support it.
I think any cash would factor in very specifically to any transaction price but doesn't tend to get valued as specifically in the prevailing stock price especially if there have never been dividends or other history of SH friendliness. While SHs may indirectly "own" the cash, they may never get their hands on it, so don't necessarily bid the stock price up to reflect it.
It looks like if he's terminated while under contract (except for cause) he gets one year of salary and health benefits.
Myth--I couldn't find Morgan's original agreement in the filings, but below is the language from Vincente's whose agreement may be more generous as he was senior. It looks like you're correct that a parachute isn't automatically triggered upon change of control--only if he's terminated, has a pay cut or is demoted within one year of the change of control.
e) Change of Control Termination. If (a) there is a Change of Control at the Company (defined as (i) the acquisition of all or a majority of the outstanding voting shares of the Company by a new person, (ii) the acquisition of all or a majority of the assets of the Company by a new person, (iii) the merger of the Company with another person, or (iv) the election of a majority of directors to the Board of Directors of the Company who are not persons who were nominated for election by a majority of the then existing Board of Directors (e.g. were not on the Management slate of nominees for election); and (b) the Employee’s employment is terminated by the Company, or employee’s compensation is reduced from its then current level or employee’s responsibilities are reduced or downgraded (each of such events hereinafter referred to a “Triggering Event”), and which Triggering Event occurs within one year after such Change of Control; then the Company shall pay to the Employee a Termination Bonus in the form of a lump sum cash payment in an amount no less than the total of the highest annual salary plus bonus amount set forth in this Agreement multiplied by two (2). The Termination Bonus shall be paid as a lump sum within thirty (30) days of the Triggering Event.
(f) Termination, with No Change of Control; Termination after the
Change of Control Period Has Lapsed. Where there has been no change of control or when the one (1) year period following a Change of Control has lapsed, in the event Employee is terminated by the Company without cause, the Company shall pay Employee an amount equal to all compensation paid by the Company to the Employee for the 24 months preceding the termination, including Employee’s salary, equity, bonus, stock options and other compensation that were received by Employee, which said termination bonus shall be paid monthly, in equal installments, over the 24-month period following termination. Any salary and bonus that Employee elected to take in stock in the prior 24-month period will be calculated as if the Employee was paid the value of such stock in cash. In addition, during this 24-month period, Company shall keep Employee on Company’s health plan, on the same terms as before the termination. In the event the Company terminates Employee for cause, as determined by vote of the disinterested directors of the Board of Directors, Employee shall not be entitled to such compensation, though a severance may be paid by Company to Employee as deemed appropriate by the Board of Directors, other than Employee. For purposes of this paragraph, “Cause” shall be defined as failure to exercise duties of care, diligence, loyalty and any other duties applicable to officers of corporations incorporated in the state of Florida, and shall also include (i) an intentional act of fraud, embezzlement, theft or any other material violation of law that occurs during or in the course of Employee’s employment with the Company; (ii) intentional damage to the Company’s assets; (iii) intentional disclosure of the Company’s confidential information contrary to Company’s policies; (iv) breach of Employee’s obligations under this Agreement; (v) intentional breach of the Company’s policies; (vii) the willful and continued failure to substantially perform the required duties (other than as a result of incapacity due to physical or mental illness); or (vi) willful conduct by Employee that is demonstrably and materially injurious to the Company, monetarily or otherwise. An act, or a failure to act, shall not be deemed willful or intentional, as those terms are defined herein, unless it is done, or omitted to be done, by Employee in bad faith or without a reasonable belief by Employee that his action or omission was in the best interest of the Company. Failure to meet performance standards or objectives, by itself, does not constitute Cause. If Employee terminates this Agreement, no such compensation described in this paragraph shall be available to Employee.
That contract extension is routine IMO and unrelated to any transaction. It can still be amended to a small part time salary at any time although the parachute is triggered for change of control. If they're asking him to stay and keep the lights on during this lengthy process that will end with his probable termination, I think the parachute is fair.
I think there will be disclosure on the sale process by the end of this month. However, it's possible they may say they haven't been successful in sourcing a buyer at an acceptable price.
NAII--Showing some life today. Good time to lighten up given its inexorable weakness? Skillz, where's the next level of technical support?
DLA--Couldn't place order online at etrade. Had to call it in. Now I can't change bid price without calling in. Weird for an established AMEX stock considering all of the sketchy OTC stocks for which I've placed orders online.
NAII--When are the NASDAQ short interest numbers as of Feb 28th reported? I can still only see through 2/15.
NAII--Yesterday's trading was weird because it seemed like it wanted to rally strong for a few hours then had a sudden significant reversal. Maybe it has something to do with the new huge HF investor where tiny $$ for them represents major trading volume for NAII. Maybe there's been some shorting which would be indicated by updated shorting data later today. Or maybe it's still Borg selling down.
NAII--Yesterday's trading was weird because it seemed like it wanted to rally strong for a few hours then had a sudden significant reversal. Maybe it has something to do with the new huge HF investor where tiny $$ for them represents major trading volume for NAII. Maybe there's been some shorting which would be indicated by updated shorting data later today. Or maybe it's still Borg selling down.
Does CBAI qualify?
Myth--I don't think the AS matters to prospective buyers of the stock because as you have pointed out repeatedly, Red Oak as the largest SH has no incentive to issue shares unless it benefits all SHs. Unlike prior management there is now good alignment of management and SH interests. Of course, they could always do a bad deal in good faith and suffer the dilution along with other SHs, but I don't think the authority to issue additional shares otherwise presents risk. Moreover, while Red Oak isn't exactly Fidelity, they do have assets and a reputation to protect, so they will be careful about any issuance of shares or use of funds that smacks of self dealing particularly with CCEL and class action lawyers keeping an eye on them.
I think it's irrelevant whether Red Oak deserves blame or credit for where SHs currently stand. What's relevant is trying to predict the end game here. Whatever Red Oak's history regarding specific investments, they're not a long term buy and hold investor. I can only guess that the offers they received haven't yet measured up to their own valuation of projected cash flows. Perhaps being willing to hold longer shows negotiating strength and allows time to pay down debt and CEO parachutes, increasing the net recurring cash flow. Eventually, maybe the bid-ask spread gets eliminated and a transaction is announced.
Keep in mind that CCEL essentially sued CBAI management for an Annual Meeting prior to Red Oak's investment when CCEL was the largest SH. Now Red Oak essentially calls the shots with its large ownership position and Board seats so the value of an Annual Meeting to CCEL has been eliminated even if statutorily required.
I have always assumed there would be a sale as Red Oak is an investor and not a "buy and hold" operator. However, if they don't get a price they like, they pay off the debt and they continue to reduce expenses, might they elect to hold for the cash flow generated by the recurring revenue? Maybe even declare a dividend? That posture might ultimately help them get a higher price from a buyer. I still doubt they will proactively try to staff up and grow the business.
Boardbrain1--What prompted that post? Did I miss some news?
APWC--Too late for PSL but this low floater running on volume the past few days on recent earnings, new dividend policy and copper price increase which writes up their inventory. Net asset value per share over $10, zero dilution ever and E&Y is auditor so not scammy.
There's a Florida anti takeover law that limits a potential acquirer from building larger than a 10 % position in the open market. If you go over 10% it's much harder to get the rest. Not sure of the details.
CCEL is staying under 10%. If they go over 10%, it makes it legally more complicated to complete an acquisition based on state anti takeover law. Not saying they're necessarily the buyer, but they have fewer handcuffs under 10%.BTW, I thought CBAI was a Florida corporation, not Delaware?
They just need a majority of votes cast to elect a director. To sell the company I believe they need a majority of outstanding shares which is a higher hurdle. Whether CCEL votes in favor or opposes a sale could matter as they are 2nd largest shareholder at 8-9%.
Electing a Board member does require a shareholder vote through a proscribed process. So they have to jump through those hoops but can vote their shares and control the outcome.
Red Oak effectively controls the BOD voting with their large minority block so I don't think expiration of board terms is of concern to them. They can extend any board member's term if necessary.
I'm guessing the final sale price will be .0085 per share. They have $2.6 million in annual recurring revenue. After estimated (WAG) annual costs assuming the company is delisted of $400,000 (rent, utilities, staffing, accounting, licensing/compliance etc.) the annual recurring net cash is $2.2 million. 5x net cash flow would be $11 million divided by 1.3 billion shares equals .0085 per share. While 5x may sound like a low multiple 1) multiples for small deals like this are low 2) including buyer transaction costs the buyer's multiple is higher 3) the buyer has to certainly expect litigation around the share price and delisting from plaintiff lawyers and disgruntled shareholders which is very expensive 4) the buyer has to assume the risk of all the shady transactions the company has completed over the years and the risk that a counter party initiates litigation when new ownership and fresh money takes over and 5) the extended period it's taking to complete a transaction doesn't bode well for a high price (a competitive process would have given Red Oak leverage to have completed it by now). Even at .0085 Red Oak gets a 4.5x compared to its .0019 share cost, so I don't think they just walk away from the process with the hope of getting more later as they then have to reinvigorate a company with no current operating momentum.
Anyone else having trouble accessing Yahoo portfolios this morning?
I would say at least 60 instead of approximately 60
Red Oak paid 19 (add decimal as appropriate) for their shares. Even a bad liquidity event yields them at least a 3x. Thats what I meant by taking their profit and moving on. It's not a great leading indicator for SHs of the ultimate sale price that the process has stalled. On the bright side, Red Oak is apparently negotiating hard for a better price. I just don't see them abandoning the process and electing to own their position for the foreseeable future.
I think Red Oak needs to be held to a higher standard than just telling the truth and not diluting the share count. Clearly, their process has bogged down which is a disappointment to SH's hoping for liquidity at a much higher price. Yes the company is stable, but there is no catalyst for the share price to rise absent a transaction. The reference to the company continuing on a stand alone basis I'm guessing is just a bluff to any potential buyers. I don't see Red Oak holding its position and continuing to operate the business much into 2017. They will take their profit and move on. The delay signals a lower eventual sales price IMO.
Very lame statement about their M&A process. Update in Q1 with no transaction presented as a possibility. Hard to feel good about that as a SH hoping for liquidity. Appears their process has sputtered as they have has ample time to come to terms with an interested buyer.
I believe their Q is due by 11/15 of next week? You would think there would be some transaction update in that report.
VIX now down 17%! How improbable did that seem last night when Dow futures were down 700? Quite a whipsaw.
Stock future declines now more modest. Treasury yields spiking big time I guess reflecting uncertainty of new administration and fears of higher deficits. Bank stocks should perform well with higher interest rates and less regulation.
Futures down massively
Where is the futures quote?TIA
Oil tanking, gold spiking, VIX rising, stock indexes weakening. Seems to be regressing from a normal correction towards a bearish market. IMO not a good time to invest in small cap stocks based upon PE valuation except with a long term hold assumption. After reaching recent highs, 10 year Treasury yields starting to back down driven by risk aversion. I bet the yield will be back below 1.6% prior to year end.