$PIOI some thoughts here going forward...
On Wednesday 4/26 10:30am (Central Time) P10 will be going before the judge in a combined hearing seeking final confirmation of the prepackaged plan and disclosure statements.
The final claims date (last day for a creditor to file a claim against P10) was 4/21 and no additional claims were filed.
The final day for objections to the prepackaged plan and disclosure statement was also 4/21 and no objections were filed.
One claim that does exist is to the IRS for several older Payroll Tax related returns that were supposedly not filed, a 2017 Payroll Tax Return which was not filed before the Chapter 11 case commenced and the 2016 Federal Income Tax Return (which is not currently due)
My feeling is that the older Payroll Taxes were paid (P10 has used ADP payroll for years) and that this is simply a clerical error which should not cause any problems with confirming the Chapter 11 Plan.
I believe at this point is that the plan will be approved as presented on Wednesday 4/26 or will be approved contingent on one or more minor administrative items which need to be completed by P10 in a very short time frame.
In discussed valuation in several previous posts and irrespective of what value is placed on P10 based on your own judgement, I think it is important to recognize that getting to that number is not as simple as wrapping up Chapter 11.
In a rough order of magnitude, I would say that the following catalysts need to take place to extract the appropriate value of P10 and get from “here” to “there”
1. Final Confirmation of Chapter 11
2. Issuance of New Shares to current stockholders, 210 Capital, and the corresponding investment by 210 Capital
3. P10 begins trading again without the “Q” attached to the ticker
4. Announcement by P10 that they have a company under contract to acquire (NEW CO)
5. Closing on the NEW CO and the subsequent infusion of $10m by 210 Capital under the preferred line of credit.
6. Any news on Patent licensing or the potential sale of a Patent or Patents (this could happen simultaneously with prior steps or at a later time)
Until Steps 1-4 happen, we will not see the maximum value of the NOLs reflected in the stock price because under conventional valuation methods, it is not possible to apply an appropriate DCF model to the NOLs without first having a profitable company (and associated profit forecast) on the books of P10. Once a profitable company is acquired, it will be possible to forecast the time necessary to extract the value of the NOLs which will then allow the market to apply the appropriate DCF and discount the value accordingly to arrive at a NPV for the NOLs.
Based on the proposed capital structure of P10 upon exiting Chapter 11, I think that the company can afford to acquire a company with a value of $75m - $100m through a combination of cash, the preferred line of credit, rights offering of common shares, and external debt.
Alternatively, P10 could also bring a private company public via a quasi-reverse merger and do so mainly thru the issue of common shares.
On risk going forward is that through some of the proposed actions above, although the market cap of P10 could increase dramatically, if an excessive number of common shares were issued to accomplish this, the dilution will not help the overall stock price in the short term.
-BioHunter
-BioHunter
Twitter: @TheBio_Hunter
