M+,
I'm obviously skeptical of Biotrader's "$50M", as at this point I can't imagine that management would fail to disclose anything. Ms. Yeh, in particular, would likely be in a whole lot of hot water if that were to occur. As it sits, she's tiptoeing a very fine line between the intent of the law and the letter of the law, and being an attorney, she can't plead ignorance. (In my personal opinion, she has crossed the line by failing to have bankruptcy filed, or having resiged in the absence of the filing. Interestingly, per the filed disclosure, a week ago she dumped just over half of her holdings, which could be construed to show how little faith she has in the future value of the company's stock. Source: Edgar Online, Insider Transactions, 2018-06-19. I hold her assessment, particularly as an insider, over that of Biotrader.)
On the other hand, it's worth reading the "Management information circular", filed with Sedar on April 27, and in particular the discussion starting on p. 23 and continuing through p. 28. On p. 25 there is discussion related to an offer from "Company B" of USD$40 million (which is over CDN$50 million) for the data protection and archiving business, subject to "among other things, the satisfactory completion of due diligence." Company B then rejected some of the terms that PT, EK, et. al had responded with. It appears that management then attempted to persuade Company B to instead consider participating in EK's scheme.
I wouldn't characterize this as rejecting an offer. It does look to me like EK et. al's personal interest was favored over that of the shareholders. The $45MM was probably constructed for the appearance of being a better offer to cover management's, uh, butt.
They may have once had a USD$40MM offer on the table, but the details weren't disclosed well enough to determine, for example, how much was cash and the details of the rejected terms.
I once offered a bank $250,000 cash for a non-performing asset. They blew me off, saying they had an offer of $375,000. They called back six months later asking if my offer was still valid. There's often a big difference between a cash-on-the-barrelhead deal and one loaded with financing, carry-backs, claw-backs, warranties and terms.
Colbeck probably relied on the existence of interest in the DP&A business in their decision to buy the paper. They would be in a win-win if it turns out to be reasonably viable. If ANY is able to pay off the paper, Colbeck walks away with the discount - probably a very good return on a very short term investment. If ANY doesn't cough up the cash by the end of this week (or perhaps another extension or so), they can sell the DP&A business, debt free, and with no strings attached, and perhaps for as much as twice what they paid. The buyer, however, is stuck with a very large burn, a lot of wind-down and consolidation costs, and shell-shocked customer base.
It will be entertaining.
P.S. I did casually discuss Sphere 3D with an SEC attorney. It's hard to find someone within their jurisdiction who they could hold accountable. CCP isn't publicly traded, and they probably wound up being one if the biggest losers. PT and SI are likely out of reach, even though in my opinion they deserve a lifetime ban. Yeh may have culpability, but she comes in after most of the losses occurred.
AI
