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This seems like a reasonable conversation to have been had prior to or in the early days of PWC's engagement as Monitor. The outcome has now been realized. Announcement does not trail the outcome by 60 days in a transaction involving a public company, or else the stock market would be pure chaos. Should we be awaiting announcement of a "second payment" to Fox shareholders in Disney's acquisition of it?
The distinction between suspension and cancellation shouldn't matter on either side of the argument here. Its not FINRA's place to cancel equity. The shell has no assets or employees (or prospects), but it does have shareholders. They did what they could do, at least they disallowed it from trading further. Its the old "You don't have to go home, but you can't stay here".
And on the other side, its not like the believers here would change their tune if the CUSIP was revoked. There would be no difference. The argument would simply change to the notion that "of course BIOAQ would have to cease to exist when the payout/swap happens".
The outcome of bankruptcies for publicly traded companies is not subject to opinion.
Well yeah I know what it said- it affirmed the stated deal. It was very reasonable for the letter to be requested to minimize closing/funding risk of one party in the JV failing to perform. But that certainly doesn't/can't mean there are any new terms in that letter that are not available to the public.
If it were material to the stock price while it was trading (apart from what was already reported and released), it would have to have been released. The investing public does not have to make investment decisions like they are playing a game with Monte Hall.
The affirmation letter was for the court to make sure both sides of the JV would perform in the event the court selected its bid. The idea that the court sealed a deal of substantially more value and kept it from the public involving a still publicly traded company is ludicrous.
Not sure how this is controversial.
I believe it was called Upfront Purchase Price. Obviously if additional payments were being contemplated then it would have been appropriate to define terms like Upfront Payment and Closing Payment (or something like that) under a heading of Total Consideration. It wouldn’t make any drafting sense to define Upfront Payment and not define the others within the four corners of that document. Therefore very clear that “Upfront” simply qualifies the timing of the payment of the total consideration in this instance and not a bifurcation of it.
Also, it was stated that a 10% deposit was recieved. So this hopeless “Upfront Payment” notion hypothesizes basically a deposit on a deposit.
I’m sure PWC is well aware of their duty to report linearly and transparently as this process was underway and obviously had a few twists and turns, as well as a responsibility to report the final outcome very clearly.
It’s much easier to accept that at one time a share purchase was sought, talked about and desired and there exists paper trail of those discussions on the way to a final outcome, than a transaction happened that was unable to be disclosed due to NDA, but was clumsily and mistakenly disclosed anyway by virtue of the word “exceptional” and other odds and ends.
A transaction that would have a transformative impact on the share price is not the sort of thing that can be protected by NDA. Any such discussion would need to be disclosed so that the investing public could price accordingly, likely discounted by a view on closing risk.
But set that aside and maintain your view that additional activity was disclosed by virtue of hints amid active deception to the contrary, my point was that there is only one outcome of the results of the liquidation (even in your scenario), and it was disclosed to the satisfaction of those that have the responsibility to disclose it. A view will be “proven right”, but it is right right now. It is not unknowable. That would make the stock market impossible to invest in.
I have never understood the scarcity notion as a way to group-chant up the price of a stock. Whether there is 10 million tradeable shares at 1.50 or 100M shares at .15, as long as there is a piece of a company’s market cap with a reasonable relationship to the daily trade volume available to trade, there is an efficient market environment and no mystical upward (or downward) pressure based on this notion.
Things like future company performance, market share and sentiment are subject to opinion and judgement. It’s how investors make money. The results of corporate transactions are not subject to opinion or guessing. Disclosure rules and regulations are of paramount importance to having a functioning market.
But if these items were OK to be disclosed (no one appears to be reprimanded), and they proved the existence of a "second transaction", why the moratorium on any affirmative statement of a second transaction?
so the judge was permitted to announce the existence of a second transaction?
Seems a much shorter logical distance to travel to me to assume the "s" in question was referencing something that wouldn't be expected to affect the stock price (in accordance with fundamental disclosure responsibilities) such as: the establishment of the JV, a Security or Escrow Agreement, Non-compete or Consulting Agreements (whether separate from or ancillary to the APA) than to represent the introduction of a highly material (completely transformative of the stock value) new transaction of publicly unknown value.
Pretty sure the 2.8M included extinguishment of some debt and likely playing with A/P and A/R.
What is it about this company where its always what is not public is so great in between disappointing public reports?
Of course. I was just pointing out the inconsistency of believing such a transaction could be "disclosed" via some well placed words and phrases but also protected by a confidentiality provision.
I'm interested in the line at which it is perceived that the monitor had to stop in its presentation of material information.
It seems it is believed that the monitor chose to disclose key material information (expected to affect the share price) regarding some positive outcome of the proceedings but not any actual key material information itself. Was the "2nd transaction" protected by a confidentiality requirement or not? Certainly it was not if the word "exceptional" is proof positive that it exists.
Obviously this would represent abject failure to present a fair playing field to the investing public.
So your position here is that its not publicly knowable now and wasn't at the time of delisting whether this was worth $0 or $4+ as a result of the transaction? Its just a coin flip and no one can know for certain? This would mean the governing authorities have allowed investing in a public company to offer the same profile as Let's Make A Deal.
A comment on the "best interest of all stakeholders" remark.
This is a common legal-sounding remark made by a judge who literally is bound by a duty to approve a result that is in the best interest of all stakeholders. In no way does this mean that all or even any stakeholder will be happy with the result. It just means there was not a result available that would make any stakeholder cohort better off without affecting the others. In a bankruptcy case where almost always noone is very happy with the result, all the more reason for a judge to rationalize the result they approved this way.
If there were offers of 2M, 4M and 100M, then approving a 4M deal would NOT be acting in the best interest of all stakeholders. If there were offers of 1M, 2M and 4M, and there was sufficient comfort that there was no way to improve these offers, then approving a 4M proposal WOULD be in the best interest of all stakeholders.
Assuming a 12.5M LTM revenue for SC, they were just purchased for a P/R multiple of 2. It would be insulting the investment community to assume it would ascribe an immediate 8X arbitrage opportunity to the target in the merger, but anyway, it simply wouldn't happen.
Theoretically, the post-merger value of the combined companies is the value of Verb + SC + the synergies.
Well, SC is 25M.
Lets say Verb is good for 250K in yearly revenue, so we'll use the CRM multiple, 16.8 X 250K = 4.2M.
Lets say the synergies are 40% (which would be high), 29.2M X 40% = 11.7M.
Total = 40.9M.
Market cap right now is about 40M.
I tend to give the market a little more credit. I think the market generally felt an RS was a foregone conclusion (i.e., it was priced in). In fact my honest assumption was there would be a 30:1 with another small one planned to stabilize later.
15:1 was actually better than expected news and the existence of an RS was old news.
Aha, hadn't thought of the cure period.
Presumably the only avenue to repay the Note is from the proceeds of the proposed offering. If the S-1 does not go effective by 2/15 and the financials go stale, that may foreclose on the chances of receiving the proceeds of the offering before the Note matures. So while not a default event on 2/15, the company could be condemned to a future default.
Oh there is plenty of chance that it will over time. That's the reason for the acquisition. We'll see.
But remember the market has reviewed the announcement of the acquisition already. Also, by many accounts here, the money for the acquisition is assured and the integration has been ongoing. That means those items are priced in.
Not at all. My comments generally and on this post only relate to mandated publicly available info.
Any new info, new deals, new performance info etc can have a great positive impact here.
However, there is a 0% chance of a "new" (assuming substantially higher) valuation of a public company acquiring a private one.
This is 100% correct, obviously.
Hey Ted,
Lots to digest there RM. I think you are saying that IF NFUSZ has great tech then we wouldn't still be waiting after all of this time for it to be reflected in the share price: the word would be out due to the enormous payoff. [/I]
Well certainly there are expectations that haven't been met. I mean, yeah, if the tech was widely accepted today it would be manifested in several clear ways. Not clear to me if the ultimate functionality of the products have been shown to yet get a fair assessment. Only the company knows if they showed their best stuff and failed or if the best is yet to come. If another pivot is announced, I think that makes the answer clear. Or who knows, maybe some real signs of acceptance and huge value is coming some day.
So, I'm curious as to whether you believe the opposite is true: If they have tech that is of little value shouldn't the stock price reflect that? [/I]
Even today we have a market cap of almost $40 million. That reflects an awful lot of success that currently doesn't exist.
Do you believe it accurately reflects the prospects based on all that is known? [/I]
Well, I believe by definition it reflects the best assessment the market can give at this time, yes. Honestly I am not qualified enough to give my own assessment of the prospects. I have to keep my comments to logic related to actual behavior and public info.
It's hard for me to accept the idea that the real value is being kept a secret if it is very large. Too many clients, potential clients, and others have SEEN and USED the products for them or their contacts not to be buying up huge amounts of the stock if in fact this is game changing technology that will revolutionize all of video in hundreds of different sectors. [/I]
No chance the "real value" is being kept a secret. Insane asylum type stuff. But it could be that there are reasons to be optimistic if changes are made, etc. Lots of examples of pivots working out well.
Something doesn't add up: Either the barriers to entry are far less than what many want to believe, or the maybe real value is not going to be huge any time soon if ever, or if it is it will be because they finally hit it big with a new idea for something not yet tested such as Facebook Live or something along those lines. [/I]
Yep, comports with my thinking.
Thank you!!
Agree on the market cap. Since the company is being acquired cash and stock, all dilutive, theoretically the only increase to the market cap is the value of the perceived synergy, discounted by the risk associated with the deal not closing. I would think there would be some synergy, perhaps the market will not allow that synergy to be realized until there is some evidence of conversion.
Agree with some things in here.
I generally feel that "overvalued" and "undervalued" are over-utilized. The market at large is incredibly well incentivized to value things appropriately based on available information (and of course, it is mandated that all material information be quickly made public). There is an unbelievable amount of sophistication and competition out there to find items that truly present a value arbitrage opportunity, which is literally what is meant by "undervalued", which is a different concept than betting on increasingly better future public information, performance and market acceptance.
The truth is it is very hard to say, when a company grows to become hugely valuable over time, how much the appreciation relates to it being "undervalued" at a prior time or how much it relates to the market sensibly valuing increasingly positive information over time. To me its much more the latter than the former. For example, was Netflix undervalued when it was mailing dvd's since it would one day be an aggregator and producer of a huge amount of valuable streaming content or was it valued more or less appropriately by a very motivated market at various stages along the way?
Either way, my opinion, management dwelling much on the market's "poor" valuation of its company is an extremely unflattering look. Its like a singer upset that more people don't like his/her songs and that he/she is not as wealthy or famous as he/she desires. Its trying to put an individual face (to tell them they are wrong) on something that is not an individual at all. If you want your songs to be better accepted, write and perform better music. If you want to get a higher valuation, present a better story with better evidence. Maybe that will happen here. I hope so as I hope everyone here makes a lot of money.
There is no theoretical basis I am aware of that there exists a large arbitrage opportunity going from OTC to Nasdaq based on that alone. If that were true there would be a legion of investors scouring for such opportunities and announcements to uplist would be accompanied by price appreciation (to the extent it was believed that uplisting would occur). Appreciation could always coincide with such a move, based on more and better public information concurrent with or post uplist.
Agree with all of this.
I can make an obvious observation here.
There seems to be 2 kinds of arguments on this board. One relates to "business prospects". This argument can't be settled. The technology here will catch on and be ubiquitous or it will won't. Optimistic folks can always say it will happen down the road. And maybe it will. To stay completely unbiased here, I won't even comment.
The second type of argument I will categorize as "market mechanics".
1) the idea that a company that doesn't like its valuation (every company on every exchange or platform feels this way) can form a subsidiary and acquire a private company and get new valuation, except, like, way higher.
2) the idea that the valuation of this company is not a simple supply/demand story and is instead a battle between "longs" and "shorts" waged primarily on this message board.
3) the notion that raising debt on the terms recently done here is also indicative of a company that is storing "news".
These items are totally insane. I believe that anyone perpetrating these totally indefensible thoughts is causing a semi-public embarrassment for the company. I do think these ideas have cause a lot of eyeballs to veer away from here.