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You cannot acquire NOLs
If you buy the company the NOLs are cancelled. The company has to buy another company to use them. So that plan won't work unfortunately
Thanks!
Good find. Hopefully incentive to get them moving. Still wonder why they are not more communicative ....
I don't think it tells us much about the future plans.
The bet here as I see it is that they will do some transaction including a capital infusion that will use the NOLs. That transaction will probably include dilution so we have to hope that post dilution current shareholders will come out ahead.
Wmih took several years to finally do their transaction hopefully this will be sooner
Thank you
Appreciate that and any response you might get. If you are comfortable sharing the contact information for others to send a similar message, we would appreciate.
Happy New year
Update?
Wouldn't it be in management's best interest to update the public as to what the plan is and timetable?
Great news.
Hopefully we will hear from the company in the coming weeks. Those expecting any movement or volume before getting any concrete news may be disappointed. This all was expected so the next step is to hear what the game plan is. Then the value of the stock can be assessed....
Right,and based on the filing you posted (thanks again!) why would we expect anything before October?
Seems to completely explain why we have no volume and there has been no news .... This has to be resolved first
Sounds like it will be an interesting few months ahead of us! Hoping for the best
Thanks all
Thanks for posting that. Seems very significant event in that it closes the book on the BK and now they are free move forward (?) and communicate a plan, publish financials, etc
Right?
Thanks again
Rockraider, I think you are correct.
Regarding the carrying value of AR and the cash. Apologies.
Yes, I believe so.
I think Syncora was carrying the toll roads @ 170MM so the sale @ $220MM gives them a book value increase of $50MM. At least that's how I understand it, but others may know better. Many (not me) thought they would get $400MM+ for it, hence the stock sell off. Therefore, see below, we are sitting at BV of $4.50 with toll roads done
FWIW, a long while ago I suggested they shouldn't sell it unless they got a fantastic price. As others have posted, and I agree, this would have been better off to stay in SYCRF to generate earnings! Sycrf could have relisted as an infrastructure company, and someone would take them out @ $10 in 5 years! I don't see the logic, unless there's a grand plan that we are not seeing.
Anyways, curious as to what BV is without surplus notes and also how we accrete earnings from here? That said, BV is going to be increasingly meaningless, IMO, as a way to value it... we need to see projected cash flows. Macquarie is a nice kicker, but the main story is cash flow, again, IMHO. Does anyone have a way to estimate cash flows in current state?
Reposting Irish's build up to remind everyone:
$587,906,000 Assets
$+348,774,000 Liabilities (negative liability)
=
$936,680,000
-$400,000,000 (surplus note remaining)
-$134,500,000 (preferred share liability)
-$130,000,000 (future 10% loss on net par outstanding)
+$50,000,000 (Macquarie settlement)
+$50,000,000 (Puerto Rico recovery net)
+$20,000,000 (Detroit activity)
=
$392,180,000 / 87,000,000 common = $4.51/share
Thanks for this great post.
You have done much for the members of this board and we are appreciative.
Could one of the moderators of the board make this a sticky post (140628135) since it got lost in the noise of the daily stock price commentary?
Also one question:how is value realized? Do we just release premiums as they become earned? And then we have to buy someone to utilize the NOLs as the cash is unrestricted?
Thanks everyone for great work these past few years
Ticker change
I see the Q was removed from the ticker. That seems like progress.
Question about valuation:
If book value net of future expected transactions and NOLs is about $9 (Greenpoint + toll roads - PR + NOL) what should basically a shell company trade at in terms of book multiple?
Mbi is 0.3
Bhf is .5
Not sure what wmih is, probably a better comp.
Any thoughts?
Btw, I have been long sycrf for years ($0.2 cost) so just want to be smart about where this can go.
Thanks to all
Thanks for the analysis
Why wouldn't they just pay off the surplus and prefs using lower leverage (say 8x). Then use the $250MM proceeds to buy something
Sycrf stock value is then $2.90 cash + $2 for NOL = $5
Then they can lever up further when they buy something if/when they need to
Does that make sense? Is my analysis in the ballpark?
Boy, it sure is trading heavy these past few weeks
I see two reasons:
1) somebody knows something...
2) A long-time holder who is sick of it is using recent liquidity to exit his position at all costs and realize some losses
I fear it is #1 but open to other ideas. I am long and hoping the answer is #2.
No, stock is down for other reasons
Under utilization from contract roll offs, seemingly unexpected, caused them to cut guidance from roughly 8% growth to 8% decline. Sell side downgrades, div cuts, etc.
Nothing to do with syncora remotely
I don't think anyone can buy syncora, due to NOLs, so I see that as unlikely. Which leads me to a dumb question...why sell their operating businesses, eg toll roads,etc,as don't they need income to start using up the NOLs?
In other words, after they sell it, won't they just turn around and buy some other operating business?
I think it is soon
I wonder if the pressure on the stock is due to somebody knowing something...a little worrisome
Well done!
Maybe they were behind that spike a few weeks back
Yes, finally
Been waiting a while for that one. I like the setup here better for a few reasons. That one was complex and took a long while. Also, they bought a public company. I was also involved in another similar situation a few years ago which bought a private company and that worked out much better for all parties, of course the target company was a good selection. That was quicker as well. This seems like it could follow that template, I hope anyways.
So, hopefully they have a plan and can execute faster than WMIH. I'm optimistic.
Hard to say of course
You note to start a new business, but perhaps they have one in mind they want to acquire. To use those NOLs they would have to acquire something substantial, wouldn't they?
Key considerations:
- how much do they own and therefore how much dilution at this price would they accept?
- business plan: target an existing company or start a new one, as you suggest
- the above would affect the debt they can raise, which I'm sure is their preference
So, not too helpful, but wonder if I am missing anything, as this is not my area of expertise. As a long, what worries me some is that sometimes these shell companies take a long time to get off the ground (I'm thinking WMIH, SYCRF, and a few others I have observed).
It does look promising, I hope in the next week or two we get a clear communication as to the business plan and capitalization parameters
Thanks for your posts
That's how I read it
News in 3-4 weeks it seems
As someone previously posted, it seems things are on track to have some clarity by mid/late Feb. I assume we still do not know size of dilution or any other details but will learn that in Feb (?)
Thanks all
I would assume so.
Of course anything is possible as we are all just guessing, but there are precedents. KKR et al recapitalized WMIH (the shell from Wamu) with $1B of prefs etc to capture their NOLs. Unfortunately, it is still languishing today at $0.80.
This group probably has less capital, unless they team up with a bigger player. But in any case (again, I have no clue) but I would assume massive dilution, a lot more than you have suggested. The current shareholder does have claim to the current assets, and hopefully the investing party has shares, so they will be kind to the current shareholders
I guess we will find out in a month or so. Definitely interested in other thoughts on this.
From Law360
The company, along with co-sponsor Wolfgang Holdings LLC, exited with bare-bones resources that include remaining proceeds from $516,000 in debtor-in-possession lending provided by Triad DIP Investors LLC, as well as new management.
"The reorganized debtor intends to use its existing business structure to create a broad based insurance and investment platform," the company said in its Chapter 11 disclosure statement. It added that the reorganized company and Wolfgang "believe the company's insurance holding company platform make it uniquely suited to make profitable investments in insurance assets as well as other financial and business assets."
The plan provides for the payment of all creditors using the proceeds of the company's DIP loan, although payments for administrative expenses, including attorneys' fees, were drastically reduced through negotiation from more than $5 million to about $300,000 under the plan.
The emerging business is expected to seek partnerships with private equity investors, family offices and corporate operators to acquire operating assets and financial investments, according to the disclosure.
The plan's supporters are Triad and Wolfgang Holdings, whose sole member is Chris Manderson, a member of Triad DIP Investors. RaS II Ltd., an entity in which Triad CEO William T. Ratliff III has a controlling interest, is also a member of Triad DIP Investors, with members of Ratliff's immediate family making up the other partners in RaS II Ltd.
Assets ?
It sounds like we don't know dilution numbers yet, but do we have any balance sheet info? Assets or liabilities?
Thanks
Econ BV
Thanks to all who have been so helpful over the years in trying to navigate us through the fog!
Does anyone have a guess as to true Econ BV? Or do we have to wait for statements?
Someone posted a guess of Adj BV of $5 or so, but is that the real BV? Do we have to take out some of the value of the NOLs lower after TCJA? How much would the re-insurance add back?
I have penciled in $6-7 as the upside case (maybe more if everything goes right)... is that still valid?
THANKS TO ALL!
Follow up question
DennyCrane,
Thanks as always for your informative posts.
Just to follow up: can you quickly walk us through the value here?
They had $305mm exposure, $175mm reserved. They paid $150mm, so does that mean they are at $150mm in residual exposure?
So, roughly $2+ per share. Let's assume they get $0.50 on the dollar, we are talking $1 per share wiped out (worst case)
This is in the context of ABV of about $5 say, so they are trading 50% of worst case ABV, right? (not sure how much reliance, toll roads, etc are in ABV, so I will say ABV captures best case there to be conservative)
I don't think the NOLs are in ABV until they turn a profit, so that would of course be a whole different source of upside.
Where is am I off base? Thanks
This seems like a significant event. They have spoken about a significant liquidity mismatch in future years, does this remove that issue? If so, will they be able to take more significant action, such as a buyback? Can they re-list on a major exchange?
Further, they seem to trade at the same P/B as MBI (around .35 or so), what do they both need to get re-rated?
Any thoughts would be appreciated. Thanks to all for a really professional and knowledgeable board.
Can you clarify your last point (#3)?
Will they be facing a liquidity crunch in 2018? Anything specific?
Thanks for the posts
Thanks to you both.
I recognize I was asking for a lot. Combing through the posts, it seems that, post the surplus notes deal, the share count is 300MM with about a $6 ABV (though I don't know how to get to that number). Is that right? I know some see it as higher - I'll take $6 for now
What big needle-moving events/lawsuits are we still waiting on ? How might they impact the stock or the ABV?
Assuming the reserving is right, how many more years left before they can buy back stock or somehow return cash to shareholders? I think I saw somewhere that is closer to 2020, is that right?
Again, I recognize you are all busy and this is asking a lot, but if you have any answers to any of these, fire away. Else, no worries.
Thanks again to all
Would love a SYCRF reset if you don't mind...
Hello - I have been a long term holder but I promised myself not to watch it month to month as my thesis was that this would take years but produce nice gains. It seems to be getting closer to fruition. I am new to this board, I wish I had been following ut - there seem to be some experts on hand
If anyone is so inclined, would you be able to summarize where things stand?
What do you see as economic book value? How do you get there? What are major catalysts left? How will we realize book value, via dividends? or will this languish below book value like the banks since shareholders can't get their money out for years?
Any thoughts appreciated.... If we do get anywhere near book value, the victory party will be on me!
Thanks to all for your great posts