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Bid/ask $0.0375/$0.07
It looks like the bid and ask are retail and not the market makers. I put a block of 11,000 on each side and the shares went from 10,000 to a total of 21,000; so there is someone there looking to buy or sell, and it is not the market maker.
Louis J. Desy Jr.
Percentages paying
What percent of the members are paying?
Louis J. Desy jr.
P.S. I just saw the stock slip to $0.0002
Bot members?
No, not my beloved SierenGPS, err, I mean Good Gaming; they wouldn't do something like that, would they?
I would be shocked, shocked, shocked, I tell you if Vik/Grover and their buddies did something like that.
It would destroy my faith in humanity if they used bots to boast membership, in an effort to show good numbers to get the stock trading.
Louis J. Desy Jr.
Wanting it to go down?
Well, lets see, the last trade was $0.0003 with only 20,000 shares traded so far today. ($6 worth as of noon).
I may not be very good at reading the market or the tape for an individual stock, but it seems to me that if there was something of value here that someone would be willing to buy at least $10 worth of shares before noon.
Louis J. Desy Jr.
Almost over
The judge approved the reorg plan on Jan 26, 2017. There was an appeal filed so that may extend the entering an effective date for the plan, but once that happens, the common will stop trading and be canceled.
Louis J. Desy Jr.
Reverse split? Not likely
I do not think they will bother with a reverse split plus I do not think they can do a reverse split without bankruptcy court approval. They can just do that in the reorg plan by a combination of what the old shares covert into new shares and how many of the new shares get allocated to the old equity.
Louis J. Desy Jr.
Local gas station at $2.19
The local gas station that I use as a measure of where has prices are seems to be holding at $2.19, not falling or rising.
Hopefully, the 2016 financial statements will be ready in several weeks and we can see if the company is at least breaking even.
Louis J. Desy Jr.
Disclosure: I own shares.
Need to recalc
I think I made two mistakes in my calculations. I need to recalc and will post as soon as I finish.
Louis J. Desy Jr.
Maybe after Aug 27, 2017
According to document 1049, the company has filed to extend the exclusive period to file a reorg plan until June 29, 2017 with an additional deadline until August 29, 2017.
IF the request gets approved, that would mean the case will go on until at last Fall 2017 before the plan was confirmed.
Louis J. Desy Jr.
Link to document:
http://dm.epiq11.com/#/case/UPT/dockets/1049
Calculations for new common
Assuming the number of shares stay the same as afterwards, call it 154 million shares in Newco (reformed company after chapter 11).
A share right now is $7.50. After Chap 11, that share is only going to be about 35% in Newco equity and maybe less, so the price of existing common shares to new shares would be $7.50/35% or $21.40 per share in NewCo.
document 817 lists possible company values of $5.5 billion, $6 billion and $6.25 billion; so assume NewCo has 154 million shares with a value of $5.5 billion. That would make each Newco share worth $8.67.
Buying the existing common shares at $7.50, that get exchanged into Newco shares at 35% cost $21.40, so the stock at $7.50 is way too high.
The current stock price needs the shares to drop to at around $3 ( $3.00/35% is equal to the expected Newco share value of $8.67 ) in order for the exchange to be equal value, and lower to have a margin of safety.
Louis J. Desy Jr.
Document 817
It looks like the existing common shares are class 14 in the plan:
Class 14 — Existing HoldCo Common Stock
(1) Classification: Class 14 consists of all Existing HoldCo Common Stock.
(2) Treatment: On the Effective Date, each holder of Existing HoldCo Common Stock shall
receive its Pro Rata share of the HoldCo Equityholder New Common Stock Distribution.
In addition, each holder of Existing HoldCo Common Stock as of the Rights Offering
Record Date shall receive its Pro Rata share of the HoldCo Equityholder Subscription
Rights.
It looks like the existing common shares will get converted into about 35% of the new company:
72. “HoldCo Equityholder New Common Stock Distribution” means: (i) 41.0% of the New Common
Stock, subject to dilution on account of the Management Incentive Plan, in the event that the Settlement Plan Value
Case 16-32202 Document 817 Filed in TXSB on 12/06/16 Page 10 of 54
7
equals $6 billion; (ii) 31.8% of the New Common Stock, subject to dilution on account of the Management Incentive
Plan, in the event that the Settlement Plan Value equals $5.5 billion; or (iii) 44.8% of the New Common Stock,
subject to dilution on account of the Management Incentive Plan, in the event that the Settlement Plan Value equals
$6.25 billion.
The problem is figuring out what the company is able to generate in order to have any idea of what the shares are worth.
Louis J. Desy Jr.
Where is everyone?
There are still a little over 10 million shares outstanding, with about 25% or so owned by directors, so where is everyone else?
Do the people that own shares in this company even know they have the shares anymore?
I never see anyone talking about the company at all.
Louis J. Desy Jr.
Equity probably dead
They are not getting rid of the debt, it is probably going to get exchanged for equity in the reformed company. The existing shares will probably be wiped out.
Having said that, the shares probably will have a few spikes as most of the retail market does not understand the process, and think that they buying shares in an improved company.
Louis J. Desy Jr.
The muppets pile in?
Prospectus Filed Pursuant To Rule 424(B)(1)
I hope I am not reading this correctly, but it looks the company is valued at over $2 billion and loses over $100 million per year?
Maybe I am missing something, but what blockhead would buy shares in this?
The only winner I see here is the insiders that cashed out in the IPO.
I am envious of what the company has done, since I wish I could find investors as stupid as these, as this company has done.
Louis J. Desy Jr.
P.S. The shareholder litigation law firms should keep an eye on this one, someday it will make a good case.
Barrons mention
Anyone see the Barrons mention this weekend?
Louis J Desy Jr
Bought another small block
I bought another small block, yesterday, Friday February 03, 2017.
Prior to my purchase, hte bid/ask was $0.375/$0.04 with 10,000 on each side.
After my purchase, the bid/ask moved to $0.0375 and $0.06.
It looks like the 10,000 share block on the ask was a retail investo r prior to my purchase. After my purchase it looks like the seller is the market maker, with little to none retail activity going on.
Louis J. Desy Jr.
Problems at BANC and CEO resigned
Not sure what is going on, but there was a series of articles from Oct 18, 2016.
Banc of California Drops Amid Accusations From Short Seller
There was some 'back and forth' between the short seller and the bank, but in the end the CEO resigned and the board is doing a search for a new CEO.
Banc of California CEO Steven Sugarman Resigns
I think it is possible that the short seller may have gotten a few things wrong, but was in general on track that there were problems with the bank.
LAWSUIT FILED AGAINST BANC OF CALIFORNIA: Hagens Berman Alerts Investors in Banc of California to Securities Class Action and Lead Plaintiff Deadline
There was also a strange and very expensive deal where the bank bought naming rights to a stadium for $100 million with people related to the CEO.
Banc of California (BANC) Trades Lower After Announce SEC Probe, CEO Resignation
Hopefully, the company is now back on track with the resignation of the CEO.
As a side note, I think the board and upper management were, and probably are, a bunch of blockheads. Unless everyone was in on it and got some kind of payoff for going along, how could they have all been so stupid?
Hopefully, the activist investor highlighted in the Barron's this past weekend, will be able to take control of the place and get things running right.
Louis J. Desy Jr.
Disclosure: I own BANC common shares.
Block at $0.0375
There appears to be a block sitting at $0.0375 of 10,000 shares. I tested it to see if I could walk the bid down but was unable to do so, telling me that it is an order waiting to be filled.
Louis J. Desy Jr.
Barron's Article
Did anyone else see the small article about BANC this past weekend?
Banc of California Is Undervalued, Says Legion
Louis J. Desy Jr.
Disclosure: I own shares.
Cleaning up balance sheet
It seems that the last year or more they have been selling off all kinds of assets in order to hope to stay in business. Now that things maybe getting a little better, instead of building up some cash, they are running out and using it to pay a dividend.
Waiting a little to pay the dividend would not hurt that much, and might save them if things start going bad for them again.
Paying out the cash and then needed it later could cause all kinds of problems.
It just seems strange to be selling off assets to pay down debt and then they go ahead and pay out a dividend.
Louis J. Desy Jr.
Use of cash on Preferred Dividends
It seems with all of the recent problems, and 'near death' that the company was, they would be better off using the cash for something else besides paying preferred dividends.
It is possible that the reason for the preferred payments are that all of the arrears need to be paid up before they do something else?
Louis J. Desy Jr.
Future operations
I think the big problem is that it looks like they have no revenue. It also looks like there is no land for development. Without any revenue the tax benefits will not have any taxable income to be of use against.
I can't see any reason why the convertible bonds would not move to take over the company now and recover about one third of what they are owned, instead of watching what asset are left be spent on administration every quarter while the company racks up more interest that will never get paid.
While I may be missing something here, I just can see how the company 'climbs out of hole' of being negative $100+ million, and no revenue.
Louis J. Desy Jr.
There is nothing left
TPLM 10Q report for period ending October 31, 2016
The company reported zero revenue for the three months ending 10-31-2016. Stockholders equity is negative $106 million. They report 55 million in assets to pay off $155 million in long term debt and have no revenue to generate a profit with.
Without the gain on sale of $50 million, they would have lost $21 million for the quarter.
The interest on most of the long term debt is a convertible note that is accruing at the rate of 5% per year.
There is no way for the company to even generate enough profit to keep up with the accruing interest.
I expect a Chap 11 filing any day now since everything the company has left will end up with the convertible note holders, with zero left over for unsecured liabilities and nothing left for the common shares.
Louis J. Desy Jr.
WMT layoffs
Normally, if a company was doing layoffs due to problems with how it was in an industry, I might consider that a good sign that other companies were picking up market share.
The problem with SLHD is that it is already so weak that SHLD is already doing far worse than WMT that I would expect SHLD to weaken more.
I can;t see how the company lasts much longer. No vendor in their right mind would ship goods to a company on terms when it looked like it could fold any day.
Louis J. Desy Jr.
About to file Chap 11?
From looking at the last filed 10Q report, the company should be out of cash by now.
FROT 10Q for period ending 11/30/15:
According to that report, the company had less than $100K in cash, but was losing cash more than that per quarter. Since it is now more than four quarters beyond that, the company looks like it would be a few hundred thousand behind in cash to pay its expenses.
Louis J. Desy Jr.
SHLD may not go Chap 11 for a while but stock is dead
After reading the article, it looks like the CEO is going to keep loaning money to SHLD from his hedge fund. Since he controls over 50% of SHLD, he can keep things going as long as he wants to.
I predict that as long as there is something for him to secure loans to SHLD against, he will keep putting money into it, but once the last asset of value is gone, then I expect he will let SHLD file Chapter 11 and take everything over, leaving unsecured creditors, vendors and existing common sharesholders with zero.
It also sounds like vendors are starting to cut off ties with SHLD, since what would be even worse than having zero revenue from SHLD as a customer, would be to get caught in a Chap 11 filing as an unsecured creditor. (i.e. Not only would they have no revenue but all kinds of expenses from goods supplied that they did not pay for.)
While it does look like as long as the CEO lends money to SHLD they will not file Chap 11, I do think the stock will drift lower as the equity gets swamped by the large and growing debt, to where at some point the common shares will be nothing more than like a call option on the company.
From reading the article it does look like the CEO is systematically stripping the company of assets as he loans it more money in an attempt to do a turnaround or transformation of the company into some kind of marketing/tech idea.
I think that any vendor supplying the company as an unsecured creditor has to be out of their minds.
I still can't believe the stock trades as high as it does, since it looks like the company is on track to lose $1 billion plus per year for ongoing operations, until Chap 11 is filed, and is never going to make any money.
Louis J. Desy Jr.
Disclosure: I own Jan 18 $5 put options.
Dark pools and naked shorts
I am not so sure either would cause that.
SHLD is unusual in that the insiders own a lot of stock, making is risky for anyone shorting the shares. I am not had a chance to look, but I expect the rebate rate is a little high for SHLD.
The CEO shoveling in his own money seems incredibly stupid thing to do, and even with the fact that it looks like the fund's loans are somewhat secured, it still looks like a 'bad deal'. Once the company crashes in Chap 11, I would be surprised if the brand name of Sears to have any value afterwards. Other side of the brand name, the only thing left of value is some real estate, in empty malls, that no one wants.
It looks like this is on track for a larger loss than those fund had with Radio Shack.
Louis J. Desy Jr.
What event will finally force Chap 11?
Anyone have an idea what event will or could finally force SHLD to file for Chap 11?
I think everyone is in agreement that it is only a matter of time, the problem is when. with the CEO controlling a large voting block through his fund, plus being able to keep loaning money from the fund to SHLD, there appears to be no event or deadline for any Chap 11.
Over at BTUUQ and other like situations, usually there arrives a point when they can make the payments on the debt, which usually starts a 30 day countdown to the filing, and gives people a chance to take a position on the trade.
Here is looks like the problem is that the CEO can keep this going as long as he is will to loan money to the company from his fund.
Louis J. Desy Jr.
Disclosure: I own Jan 2018 $5 puts
Posts and resolve by Kidrin the CEO
1: I repeat, Kidrin the CEO did not seem to be concerned at all with the movement in the stock price. From what I can tell, it is not that he does not care, but he does not consider it significant on any decline in the stock price and seems to view it as temporary when compared to the final result at the end of the ATVI trial.
2: I, and I think others, would consider it significant that some holders of the stock are resorting to emails with people talking about the company. The reason is that considering the volume of the trading in the shares was under a million shares per day recently, if this group of people panic and dump their shares on the market all at once, it could cause another decline in the share price, or make it harder for the stock price to recover from any drop in price.
It is hard enough for many traders to hold onto a stock when the price is dropping, I think it will be impossible for this group of hysterical retail market to hold onto the shares if the price starts sliding. i.e. I do not see this group of holders in the common shares as being able to view it as an opportunity to buy more shares at a lower price, instead I see they will become more emotional and start unloading shares into a decline, making a decline worse.
Normally, I would not bother relaying my impressions from such a conversation, but this person seemed to be on the verge of out and out right 'bawling their eyes out'. This is something I have never seen before, even in other situations in the face of large losses on some trades I have know some people to take over the years.
3: I did suggest that they should consider selling their holdings before end of 2016, in order to take the loss for tax year 2016, then wait 30 days and buy the shares back at a lower cost once the 35+ million shares start to get sold into the retail market. The sender of the emails seemed to be completely unable to consider such a typical trading strategy that I consider it likely that when they finally change their minds, they will be in the middle of a full blown panic.
Louis J. Desy Jr.
It is not the same person
I assume the name chosen was because the sender admires the known public figure, so I do NOT believe it is the public figure himself.
I do wonder if someone, with some kind of connection to the company is trying to stop anything negative about the stock from being discussed or some holder of a large block of common shares, bought at a higher price.
It is also possible that other private messages are being sent to anyone that says anything negative about the company.
I do NOT believe the company itself would ever do such a thing (pump up the stock), since my emails with the CEO seemed to indicate that he never let the changes in the stock price bother him at all. But I could see that maybe someone holding convertible debt or someone that knows someone that does, could try such a thing.
While it is not the first time someone contacted me about my posting on a company by email, in an effort to stop any discussion on my part, this is the first time that someone has done it with a company that at least has common shares that are NOT decorative (WDDD common shares have actual ownership in the company and are a majority of the voting rights) and owns something that may be of value (the patents).
I do consider it significant about the stock that someone would go through the bother of sending me an email instead of just using the message board.
I think in the days to come, that once the 35+ million shares start up unload, and the price drops, we are going to see people like the sender of the email start to dump more shares as they become very emotional with any decline in price, thereby making any decline worse than it would have been normally.
Louis J. Desy Jr.
The $200 million additional line of credit
The funny thing, is that it is NOT in cash, it is a line of credit to use to issue letters of credit.
With most business situations that would not really matter, since the line of credit would be used to pay for more inventory that would be used to generate sales and profits.
Here, what real difference does it make when sales are in decline? It is just adding another cost to their payables. Instead of getting product with no interest expenses, now there is going to be interest on another $200 million worth of purchases at a time. Every time the line rolls over with a new set of $200 million, there will probably be 0.5% to 1.5% in fees and interest for the letters of credit, so it the line rolls over 10 times per year, fees and expenses could go up as much as $30 million.
Of course, with the amount of money they lose every quarter, losing another five to ten million per quarter will not even be noticed or make much of a difference.
I still find it amazing that 'they had it all' in the late 1970s/early 1980s and just seem to have lost everything on what to do or the future.
Louis J. Desy Jr.
Selling WORX to fund the case.
I did send an email to the company years ago, suggesting that one method to at least build up a reasonable 'war chest' of several hundred thousand in cash, so the company would not have to go begging for financing every year and also, I had hope, would make it more likely that ATVI would offer to settle instead of dragging the case out to the end. Part of my email to the company was that I did not think there was any chance whatsoever of ATVI or anyone agreeing to settle since it always looked like the WDDD could run out of cash any day. i.e. Why would anyone offer to settle a lawsuit when it looks like there is no way the other side will even be around in a year?
It was also one of the reason I had hoped that VRNG would have taken over WDDD with a stock swap, while some of the upside would have been given up, WDDD would have then become part of a company with several million in the bank, credible investors invovled, and access to additional legal talent and experts, and WDDD shareholders would have had some of the risk spread out be also having a stake in the VRNG patents.
Now VRNG is limping along also and can't do anything.
Louis J. Desy Jr.
Assigning judges
While in theory the assignment of judges within practice areas, is supposed to be whoever is available and random, there are situations where whoever is in the clerks office could effect the schedule and I suspect even the assignment. As an example, one of my classmates, shortly after they started practicing in MA, made the horrible error of yelling at one of the Boston Municipal court clerks one day. After that she was basically 'all done' in that court. Any cases she was involved in took forever to be scheduled and it was so bad that she ended up taking work in the Springfield area. She ended up driving the two hours each way from Boston to Springfield for a few months until she was able to move to the other end of the state.
It would not surprise me if the clerk could have also arranged to assign judges that he thought would be more likely to be on the other side, as far a judicial philosophy, on what ever case she finally got into court.
Louis J. Desy Jr.
UP to $50 million
IF that WDDD never had any offers is true, then it could only be because they never pursued any such deal.
VRNG was able to get $3 million, in CASH, from Mark Cuban in return for 7% of the company at the time.
http://www.businessinsider.com/mark-cuban-heres-why-im-taking-a-big-stake-in-a-patent-troll-2012-4
http://www.businessinsider.com/mark-cuban-invests-in-vringo-which-is-suing-google-2012-4
There is no reason that WDDD could not have arrange a deal for a least a few million, in cash, that would have carried the company to the end of a trial plus appeals process. Instead the company has been limping along because the climate of software patent cases changed dramatically after VRNG lost on appeal. Now the WDDD patent claims are systematically being picked off one by one as the case wanders through the various courts and boards plus there are a truckload of shares that are going to get dumped onto the retail market any day.
Louis J. Desy Jr.
Selling off part of the case
When anyone talks about 'selling off' part of the case, everyone knows it means selling off part of the expected amount that the company was going to receive; contingency to pay the legal fees is NOT what anyone is talking about. This is understood by the longtime posters on the board.
There was speculation that the company could have gotten as much as $50 million for selling off a portion of the award the company was expected to receive at the end of any trial. this was in the same era that VRNG sold a few million ($4 million, I think) of that company to investor Mark Cuban for under 10% of the company. It would seem that a similar deal with Mark Cuban could have been done but was not because the company want to 'get it all', instead of reducing its risk and taking some of the profit when things were going well.
Louis J. Desy Jr.
Sears and Sears Hometown
I saw that last year. While it did not look like it was doing good, it did look like it was holding on.
Is there any chance that your friend can somehow recover his money invested in the franchise?
I know that over at Radio Shack the businesses that bought a franchise (operates in smaller markets as part of another business) were hurt very bad when Radio Shack filed.
One thing I would suggest is that he sees if he can somehow find another source for his inventory. That was what really did in the Radio Shack franchises, they had no way to get more inventory once they sold it off because they got cut off once Radio Shack filed for Chapter 11.
Louis J. Desy Jr.
Judicial IP Disqualification Hit Squad?
That is not good. I had some hope that what happened with VRNG vs GOOG case might have been some kind of accident that no one could have seen coming on software patents.
If that happens here the case could end up crippled, and a year lost on the CAFC appeal with nothing to show for it.
Louis J. Desy Jr.
Being greedy and appeal
I think the original poster was agreeing with me in that Kidrin should have made some kind of a deal to sell off part of the case when things for patent cases was much better.
The problem with not doing that is Kidrin made the outcome a total binary 0% or 100% event.
Many, including me, believe that he could have easily sold off a small part of the case in return for enough to finance the company to the end of the case.
Instead, because many things went against the company, they have had to issue additional shares every year at unfavorable terms, and even those share issues left the company with little cash.
The company probably has to do the appeal to get the invalidated claims back because without them the case may be getting too weak to win, or too few claims to be sure of a good chance of winning.
Louis J. Desy Jr.
Trial timeline and patents expire
Fortunately, the company did file the case against ATVI on March 30, 2012. While the patents will expire at some point, the date for infringement and damages is based on that filing date.
If the company gets a six year look back for damages, it will be from the March 30, 2012 filing date plus any infringement after that date ATVI would be liable for.
One problem with the patents expiring, is if the company does not file any additional cases prior to the patents expiring, I would not expect the company to allowed to use a six year look back on any new case. Of course, at this rate ATVI is going to be the one and only case on these patents.
Louis J. Desy Jr
Four questions on stock
In the current cycle (present day to end of CAFC)
1: What do you think will be the lowest price of the stock?
2: What day will the stock hit the lowest price?
3: What will be the highest price, and day of that price?
4: When do you think the trial will finally start?
Louis J. Desy Jr.