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PASO and CLX RM: A look back
When everything was flying high, in Apr, PASO indicated, COVID 19 was an opportunity to expedite the merger timeline.
May 28, they announced that closing will be done on Jul 15 within a span of 6 weeks, things were going really good despite Covid 19 was scary.
Jul 14, PASO indicated CLX had to defer the DD to pursue other business things, which was more important than DD and RM, right before closing date, things were not as sexy!
The next thing to close the RM in Q4/2020. First time when everyone was excited, they were closing in 6 weeks despite Covid and even they indicated Covid brought opportunity to expedite.
NOT SURE WHAT TO MAKE OF IT!
Apr 17: Corporate update:
We are pleased to announce the process has been restarted with a target date to have a Letter of Intent (LOI) secured on or before May 29th with closing of the transaction before the end of June. The adjusted timeline is at the request of the Merger Candidate so as to secure two final agreements prior to the transaction. The Covid-19 situation that has impacted the world has ironically created an opportunity to restart the process sooner than was anticipated as Global M&A for the most part had been suspended.
May 28 PR/LOI:
4. The Closing shall be on July 15, 2020 or sooner, unless the parties hereto agree to another time. Prior to the Closing, PASO shall furnish their financial statements to CLX as they should be reflected in the most recent submitted disclosure to OTC MARKETS. The due diligence period shall be that period of time between the signing of this Letter of Intent and the signing of the Definitive Agreement. Any information received by or on behalf of any investigating party shall be deemed confidential information, in accordance with the provisions of paragraph 6.
July 15 PR:
On July 14, 2020 we were issued a request by CLX Health to extend the closing date of the merger to Q4 2020. As CLX Health continues to pursue and coordinate on its business opportunities, they had to defer completion of their due diligence of PASO. It is for this reason that CLX Health is unable to meet the agreed upon closing date and they are seeking an extension. We, Patient Access Solutions, are going to honor their request and grant the extension. We have no reason to believe that this request for an extension indicates that this transaction is any less likely to occur.
Float is non-restricted tradeable shares that you, I and others hold. Outstanding shares consist of restricted and non-restricted (i.e, tradeable/float) shares.
Let's say non-restricted/float is 167m shares. If 67m shares are converted to preferred, they will retire these 67m common shares from the non-restricted shares. If nothing else changes, the tradeable shares/float will reduce to the same extent.
Does it make sense?
Great! This is how we can put other complicated puzzle pieces together, which will be beneficial for all of us!
Roofus, $15 par value remains same for 6% div. calculation only.
Once you know the conversion ratio or conversion price post RM (prefd. to common), that's a different calculation.
Prefd. share works like your principal residence. For example, you bought a home for 1 million and market price is now 1.5m. You can get that profit, when you sell. Same thing for prefd. share. Your par value is $15 but if you know the conversion ratio (let's say 1 to 250, to convert to common), then as the common share price keeps going higher, you know that once you convert to common, you will get that benefit like your home sale.
As long as it remains as prefd., you will get interest/div. on Par value of $15 basis.
So I just showed the intt. calculation in my previous analysis.
One thing they have not clarified post RM conversion ratio/price, may be we will see that on DA.
Hope this helps!
Until you read LOI and have a clear understanding as to what's going on between PASO and CLX Health as well as the JV between UST and SIQ, let's not waste time. It's good for all of us incl. yourself. thanks
Please read LOI, clause 3 ..........
PASO is paying $150m to CLX Health (10m prefd. x @15) and we assume they (UST and SIQ) are coming to the table empty handed. PASO is paying that much for face value?
Hey jevil2019, see below, do they look familiar? I do my homework, lol. Good luck anyway!
Added 650k @ ,088 with a total of Patient Access Solutions Inc. (PASHealth) (PASO) 06/14/2020 03:31:34 PM
Somethings up for sure, I grabbed 275k @ .088 Patient Access Solutions Inc. (PASHealth) (PASO) 06/12/2020 02:34:08 PM
I am not saying it will happen but it should. If you use the standard valuation method for healthcare companies, the revenue multiples used between 2 and 5 depending on the sub sector. Based on that, if you add UST and SIQ revenue, use any multiple between 2 and 5 and divide by 2.5 billion shares (that we know of for now), the stock price comes between $5 and $10.
Yes, it might not happen right away but once they settle down and generate same amount of revenue under CLX Health, it will reach that target price. Question is when, not if!
Stock price post RM based on revenue multiple:
If we combine revenue of UST Global and SeriouIQ; and use revenue multiple for valuation purposes, post RM, this alone should take stock price between $5 and $10 (even considering total os of 2.5b).
WHY PASO NOT GOING UP: A THEORY
The tender offer on Sep 18 is 0.06c ($15/250=$0.06c). If the stock price is higher (or much higher) than the tender offer on Sep 18 (or whatever the tender offer expiry date), many people may not accept it. Generally, if the stock price is lower than the tender offer, there is an incentive to convert.
To be fair, when PASO made the offer on Sep 1, the stock price was below 0.05c, so the actually provided roughly 20% premium setting up the price 0.06/share.
Last few days‘ price action shows, it can’t go up big. As soon as it starts going up, there is a big sell order and price goes down. My guess is they are trying to keep the price around 0.06c (or even below) before tender offer expires to motivate people to convert. You can do that using a fund manager or some kind, buy 5/10 million shares and use them to cap the stock price, let the stock trade normally buy if it starts going up, put a big sell order and cool down the market, once price stabilizes, stay away. So it’s possible to control the price. Normally, when stock price keeps going up, retails, day traders, swing traders and others get excited, that creates more buying pressure and price goes further up. But if it stays in a range, all these people don’t do much.
As Sep 18 approaches, if hundreds of thousands of retails and some institutions start buying, they may lose controlling the price and price may go up significantly. On the other hand, if they are smart enough, they may be able to handle that situation and still keep it under control. If the theory is right, we may see the price around 0.06c until tender offer expiry.
Of course, this is just a theory. Again the idea is that people needs Incentive/premium to convert. On conversion date, if the stock price is lower than conversion price, it’s a easy decision to convert.
It is certain that once DA is signed (and announced), that will be a Christmas. So nothing to worry!
Happy for you, seems you bought them in mid June, good luck!
Hey Roofus, your annual dividend/interest will actually be $2,358/year (not $157,200).
The calculation is as follows:
2,620 x $15 par value =$39,300x6%=$2,358/year (not $157,200).
Dividend/interest on preferred shares is always calculated using the par value. That’s why preferred shares have fixed par value and fixed interest rate attached to it. In this case, par value is $15 and rate is 6%.
Hope you’re not disappointed!
Quote:
2,620 is a nice stash to hold long-term.
When this stock reaches $4.00 per share, my preferred shares will be worth $1,000 per share ($4.00 X 250)
2,620 X $1,000 per share = $2,620,000
Compute dividend interest from this amount = $157,200 per year in interest.
Example of 6% calculation:
Assumptions:
On Sep 18 2020:
Mr. X owns 100,000 PASO stocks
1 for 250 = 400 prefd. stocks
Prefd stocks is $15/share
Common stock price = $15/250 = 0.06/share
Prefd. stock value = 400*15=$6,000
6% interest = $6,000*6%=$360
On Sep 18, 2021, Mr. X will get $360 interest
On Sep 18 2021, if common share price 0.50c and the conversion ratio remains 250 for 1 (for example) and if you calculate interest using equivalent common share, the interest will be:
100,000x0.50=$50,000x6%=$3,000
or if the share price is 0.05/c on Sep 18, 2021, then the interest will be:
100,000x0.05=$5,000x6%=$300
As you can see, the interest amount changes depending common stock price increase/decrease even though the 6% rate remains same. In reality, Mr. X will continue to get $360 interest on his 400 prefd. shares regardless of common share price at the time.
That's why you don't convert preferred to common to calculate interest on preferred. Until you really convert to common, the interest calculation will be done using $6,000 in this example, regardless of common stock price at the time.
Hope it makes sense!
PASO knows upside potential on RM. They checked with their accountants pros and cons interest on preferred shares and they found it won’t be a big burden paying 6% on face value and that’s why they went for. Based on the crazy calculations we saw here, they will go bankrupt, no matter what.
Brought a big smile on my face, good one!
First of all, in order to get interest on prefd shares, it has to remain as preferd and the second, interest is calculated on face value of preferred i.e., $15 face value, not on equivalent common shares. So whole math is wrong.
Your calculation will be on:
Number of preferred shares x face value (I.e., $15) x 6%.
If you don’t believe it, google it or ask your accountant.
Now everyone has a million shares, interesting!
If the preferred share price remains $15 as indicated in PR, the calculation should be 15x4,000x0.06 for interest calculation (unless they change the preferred share price from $15).
Since it is a tender offer, it's optional, it's not automatic. You can choose to convert or not.
How do you accept tender offer?
1. If the shares are held in your own name, you should be receiving tender offer materials in the mail;
2. If the shares are held in your broker’s name, your broker should be mailing the tender offer materials to you and providing instructions. If you have questions, contact your broker.
Converting to preferred:
Not sure if PASO will provide more info about converting to prefd. shares before Sep 18. At least should specify the conversion period, otherwise, no one knows what is the timeline to do so.
Quote:
"The second item the Company has authorized is a tender offer for all common shareholders of record on the same date.This tender offer is envisioned to benefit our loyal long term shareholders by providing them a way to earn an annual rate of 6% on their investments as they wait for our Company to achieve all the success we believe we will. The way to do this is by exchanging your common shares for the new Series C Convertible Preferred stock. That conversion rate will be one (1) share of the new Preferred for every 250 shares of common owned."
Of course, the current price action won't matter if and when RM happens. I witnessed first hand when Constellation Brand (CB) came on board with Canopy Growth in 2018. The stock price kept rising big time and made a lot of stockholders millionaires.
So much going on, so much potential, yet it continues to be red. Ideally, at this point, one would expect some more excitement in trading volume and stock price due to RM is in the process.
To be fair, PASO was never super-hyped stock even when the original RM closing date Jul 15 was approaching, it was always little low-profiled, so nothing out of ordinary.
Most likely, it will move with the news!
Some of you made some real good points, thank you for that. Unfortunately, some get so angry and use bitter languages that you can't continue the conversation. Don't know how they manage to work in an office setting. Do they explode like this when they hear a different point of view from colleagues or bosses?
We have a lot of positive and very optimistic posters here, that's great. You need people who challenge your thoughts from time to time. you can't be always with only YES people or NO people around.
These deals are big, you don't have to be in fear that it will break down if someone says something on social media, it's not that easy.
If you believe in it, stay calm, if someone says something, you like or don't like, either express your opinions one way or the other or stay quiet, enjoy and have fun. If you're happy with your investment, just enjoy. I enjoy, when i do good things.
I mentioned that it was bugging me so I wanted to see and hear a different view points. At the end of the day, if you can stay calm, meaning you're happy. If you get upset with small things, meaning for whatever reasons, you're not happy.
Anyway, good luck to all!
Recent PRs on Sep 1 and Sep 2 and a few words:
On Sep 1 PR, they indicated that PASO and its Board have been actively pursuing additional transactions in addition to LOI with CLX Health and will share the info as they become available.The following day issued a supplemental PR indication they are not as it violates the LOI with CLX.
Last few days, I kept reading these two statements many times and it kept me thinking big time. First of all Sep 1 PR was like a 1 page PR. This was a significant PR and I am sure, once the PR was ready, it was reviewed by top bosses and they okayed it. Actively pursuing additional transactions in addition to active LOI with CLX was mentioned in a separate paragraph, meaning it was not just loosely added a few words.
When you are in the middle of finalizing RM deal with a billion dollar company, would you say something like this unless the other party is on the same page or you don't care what they think. Since it is a public PR, the other party will see it right away, what kind of signal you are sending? They would think, hey we are finalizing the deal between us and your Board actively pursuing others, what does that mean?
The following day, Sep 2, they issued a supplemental PR indicating that PASO's Board has not and is not actively pursuing additional transactions as it's a violation of active LOI with CLX (as there is a restrictions not to do so in LOI).
This statement makes things even worse. If they were actively pursuing like we assumed TU and others, certainly CLX would know that and in that case, if both PASO and CLX on the same page, why would you come back following day and say we are not pursuing any additional transactions as it's a violation of LOI with CLX. If not pursuing, why did you make that statement explicitly in a separate paragraph, even mentioning we will inform you when the results are available? Are you kidding?
My take:
1. The first statement on Sep 1 that they are pursuing additional transactions was not an error, it cannot be a oversight as it was in a separate paragraph and the top bosses wouldn't let it go after their review unless it was true;
2. That means they were kind of assuring shareholders that if in case CLX does not work out, no worries, we are pursuing others;
Anyway, this particular issue is giving me a lot of trouble so thought to bring it up and see what other people think. Please see below the quotes from both Sep 1 and Sep 2 PRs.
If you have a different take, please express your opinions. I hope other people can shed some lights positive or negative. Thanks
(P.S: I know some of our fellow friends will be upset but think about it and response for or against whatever you think of this. I would love to see it succeed as I have a very large position but this thing is bugging me big time).
Quote from Sep 1 PR:
"PASO and its Board have been actively pursuing additional transactions in addition to the LOI with CLX Health, LLC. We look forward to sharing the results as they become available."
Quote from Sep 2 PR:
"It has come to the attention of the Board of Directors of PASO that further clarification is required regarding the Press Release of September 1,2020 and phrase ” actively pursuing additional transactions in addition to the LOI with CLX Health, LLC”. Patient Access Solutions, Inc (PASO) has not and is not negotiating with any other Reverse Merger parties or financial candidates at this time in keeping with the terms of paragraph 6 of the
Letter of Intent (LOI), with CLX Health which had been previously announced to the public."
Everything should be focused on one thing and that is the “DA and closing the deal”. Once this is done, there is no looking back and nothing else will matter. CLX Health alone can take it to the moon.
The other day, I provided some successful penny stocks RM in the past and the price increase post merger was unbelievable. The minimum was about 25,000% and maximum was about 500,000% from the pre merger price. PASO and CLX RM will easily sit between these percentages if it happens.
For me, potential upside is never an issue, we don’t even have to think of it, once RM happens, no one will ever complain about the stock price, particularly, those are taking a long position now.
All we need PASO to get it done.
Glad, first time feels like talking to a grown up man at least.
- Have a good night!
“it’s called business! “
Funny man, lol
This makes perfect sense that TRU and Availity are business partners, not a joint venture partners unless it is announced otherwise. The joint venture between UST Global and SeriousIQ is already formed as CLX. If the other two was going to be the JV partners, ether there would be a PR or going to be one. On the other hand, if these new ones were to be a part of RM separately, again we would see a PR or an addendum to the original LOI, unless they are under consideration, which is unlikely.
CLX Health alone (in other words UST and SeriousIQ combined) is big enough to make PASO multi billion company. Nothing else needed at this point. Let’s just hope the deal proceeds as planned without further complications.
Good post: Hope soon we will get to see PASO's name somehow appear on these news along with the big fishes.
"– TransUnion, in partnership with CLX Health, a joint venture from UST Global and SiriusIQ, announced the launch of HealthyAmerica, a technology solution that will give individuals the power to securely share their COVID-19 testing results while maintaining their individual privacy – helping businesses and schools across the country to minimize risk and reopen with greater confidence."
That's exactly the point and if we can focus on news, updates, analysis and viewpoints as long as it's useful, good for everyone!
That's good. Many people don't even read and start attacking. All I suggested that as a good investor, we should keep an eye on both risks and rewards, that's all, wouldn't you do that? There are people, who just want to go one way and live in fantasy island. Even then i don't mind it's everyone's own choice but when you attack someone without being attacked, then you get back some, it's obvious, right? Here you means not you, just for the sake of saying. You go to my post history, if you can bring one post that I attacked anyone for their comments good or bad, i will stop posting.
People can have different views as long as it's civil, it's good. If you don't have patience and civility, you're not a good investor either. Thanks
and following the cheerleaders blindly is the worst experience one can have!
Absolutely right, many men, many minds and ....Get the first and most important one done and go from there. But I think in the recent PR, they suggested that they’re pursuing others in addition to CLX, although subsequently, they clarified that they’re not pursuing others!
Risks and Rewards:
While we hope for the best, we should be open to discuss the risk factors as well. Any business case, you need to consider risks and rewards at all times, that's how it goes. Nothing is 100% sure until it happens. In order to get appreciation from the other fellow members, if we start talking all positives and avoid discussing any risk factors, we trap ourselves in a box, that's not helpful for anyone.
We all want PASO to do well so we can be benefited. Simultaneously, we need to see what PASO is doing good and what is not good. In May, they said the closing date will be Jul 15 but they failed to meet that indicating due to Covid 19. True that every businesses were affected but we have to remember May was the time when Covid 19 was the most scary thing, yet they decided to go for Jul 15 implying they knew if everything went per schedule, they will be able to close it but that did not happen. No matter what, it's a red flag, we have to keep that in mind. I am 100% certain, the delay was not just because of Covid 19, there were something else. The good news is the recent PR reassured that they are proceeding but the Q4/2020 is not as specific as the Jul 15, that means last time they were more certain, this time they don't wanna take any chances, so went for a whole quarter. It's good in the sense, if they fail again, no one will take it seriously.
Anyway, we have quite a few good posters here who are doing a good DD. My only hope is that they don't box themselves and don't raise any risk factors, just to avoid any criticism from the other fellow board members as they always expect to hear only good things. As a wise investor, we need to keep our eyes and ears open at all times.
I can guarantee one thing, whatever we say here, may change hearts and minds of a few people but won't change the overall market direction. So feel free to do the constructive criticism, when needed and appreciate when it deserve.
Good luck to all. thanks
Just because someone is longer here makes him more qualified than others is a dumb idea. If that was the case, all senior-elderly people would be in-charge of everything, everywhere on seniority basis.
Also anytime anyone pretends to know everything is also foolish. You said “ the reason the DA was postponed is the fact that more partners joined the deal” . Your reasoning for delaying the deal shows you are not quite up to date about the matters either. This is not the reason PASO mentioned for delaying in their PR, everyone knows that, I suggest you should read that again.
Respecting others opinions and views and putting forward your own are the approaches that make you wise! Good luck!
You say “I believe JG and JV partners have something going here....” There may be some truth to it. May be there were some sticking points that delayed the deal from Jul 15. First time, when they issued PR in May, the closing date was Jul 15, time period was about two months. I am sure all three parties evaluated everything with their lawyers and Accoutants as to whether they will be able to complete the process within 2 months time and they concluded affirmative. For Covid 19 or whatever other reasons, they couldn’t finish it. But the point is if things are good, it doesn’t take long.
UST Global and SeriousIQ already formed the joint venture namely CLX Health. That part is ready. PASO is still resonably a small organization. So it can be assumed most of the due diligences are already done or shouldn’t take that long.
Last time (between May and Jul), probably they had their draft DA ready. If they can come to an agreement as to the terms and conditions, the RM may come sooner rather than later. If there are issues among them, that can delay the process.
The recent developments of increasing AS, offering incentives to existing shareholders indicate they’re proceeding to the right direction. Fingers crossed.
If it happens, there will be huge upside. Of course, there are always some uncertainties if it will be done or not. If it was certain, we would put everything on this.
Hope it will be done and done soon, good luck!
We could be a part of historic RM if it works out well considering the parties involved!
Past penny stock RM examples and the affect on stock price:
In some cases, the percentage increase is unbelievable. In case of PASO, UST Global and SeriousIQ are big enough and their joint venture CLX Health merging with PASO, can create a giant (post merger). If the past examples are an indication, you may see a significant rise in stock price post merger if they can do and showcase it right.
The following are some examples of reverse merger penny stocks that made huge price moves and provided big pay days for penny stock traders.
LFZA(USSE) made a move from .0002 to 0.84. A 419,900% increase in price.
SXML(AMRP) made a move from 0.03 to $50. A 166,566% increase in price.
CYBR made a move from 0.001 to 0.50. A 49,900% increase in price.
DEXTQ – made a move from 0.0005 to 0.21. A 41,900% increase in price.
CKXE(SPEA) – ran from 0.10 to $30.60. A 30,500% increase in price.
OBDP(VQPI) – ran from 0.006 to $1.50. A 24,900% increase in price.
PKTO(USAC) – ran from 0.0002 to 0.049. A 24,400% increase in price.
If they can package it right, market it right, announce the RM in a grand way (including the declaration to uplist) and time the new big contracts, when price is on the rise, it can go up to $5 short term and if there is no screw up, it can reach $10 in 3 to 6 months.
On the other hand, if everything goes low and slow, short term can go to a dollar land and based on their PR work, gradually, can reach to $5 in 3 to 6 months.