Wednesday, October 24, 2018 9:52:02 AM
Are We Looking At A Reverse Merger?
Visolis/LCY Chemical in their Letter Of Intent stated they will own and operate the plant at Sarnia, thereby making them a strategic buyer. This will also provide the necessary conditions for taking advantage of BioAmber's net operating losses. It's important to step back for a second, set aside what will or will not happen to BioAmber's shareholders, and understand that Visolis/LCY Chemical is going to continue carrying the torch of producing bio-based succinic acid and their derivatives.
Who would want the NOLs?
There are minimum necessary conditions which must be met by any purchaser in order to capture the value of NOLs. This is why certain large companies don't simply appear and buy everything up -- they have no interest in operating the company or meeting whatever annual limitations exist in order to reap those benefits. If they could take advantage of the losses and not be hassled with pesky conditions or operate the thing (i.e. "liquidator"), of course they would do so.
Second, after the SISP failed, PwC was forced to move to the next step, which they titled "Liquidation Process". Now, at some point in all the smoke and dust, the word "Process" was trampled over and left for dead. We can call it a liquidation without the process, but the monitor's reports state that the Liquidation Process still includes a search for and an opportunity for a strategic buyer. So, PWC moved to a Liquidation Process, but that does not mean the Visolis transaction is necessarily materially different than had it arose during the SISP.
Why does it matter?
PWC's primary task in this entire situation is to find the best outcome for as many stakeholders as possible. It would have been great if BioAmber never encountered bankruptcy, but now that it has, PwC is in charge of "navigating the ship" and, if possible keep it from sinking. That would be in the best interest of all stakeholders. Sure, they could throw out the life boats and save the upper class, leave the peasants for dead (Common Shareholders), and let the whole thing crash and burn, but stakeholders never needed PWC for that task -- BioAmber's previous management was doing just fine in that regard.
What about the Seventh Monitor's Report?
You have to hand it to PwC, they are clearly experts in what they do not say. We now have the Seventh Report and the first one post-transaction. There are three areas that are worth attention:
1. UPDATE ON THE VISOLIS TRANSACTION
2. MONITOR'S ACTIVITIES SINCE THE SIXTH REPORT
3. THE "CRANE LETTER"
First, taking things at face value, it appears all of BioAmber's assets sold for US$ 4.3 million. This would mean the redacted "black bar" on the Visolis LOI actually spelled out the word "million", versus using only digits. It would be interesting to see someone revisit that and see if "US$ 4.3 million" is the same as nine digits.
Next, the monitor's activities since the Sixth Report are reported as follows, and it is worth calling attention to 12.4, (although 12.2 and 12.3 are noteworthy as well):
PwC has been specific on nearly every other point, and yet here, where it would matter, they use language that is so vague it is questionable why they would even report it to the court, "...other administrative matters..." There is no reason to waste the court's time reporting "other administrative matters" unless it is of substance. And, wouldn't you know it, they immediately follow that phrase with "pursuant to the Monitor's expanded powers provided in the Third Amended and Restated Initial Order".
Was that language purposely vague? If so, there may be a few possible reasons that point to one of two opposite, yet very significant outcomes:
1. The Monitor, pursuant to their expanded powers granted by the court is in the process of notifying the necessary entities in order to inter alia cancel the shares of common stock; or
2. Pursuant to their expanded powers negotiating plans and approval of a reverse merger.
PwC has simply been too vague to know with certainty one way or the other. Still, either of these outcomes must be considered as possible.
So, the larger question after reading the Seventh Monitor's report still remains, "What will become of the Commons?". PwC is not explicitly stating one way or the other. In regards to the Crane Letter, they merely confirm shareholders will not receive upfront cash. They also (intentionally) did not include their full response back to Crane LLP.
The Crane Letter is significant because Crane LLP asked for a lot of information and they likely now have better insight on what is to come for shareholders than those of us only reading the monitor's reports.
If anyone has access to PwC's full response back to Crane LLP it would be great to read that in full.
Finally, no matter what side of the story a person subscribes to when it comes to BIOAQ, we have yet to hear in all of this commotion a single argument of why bio-based succinic acid is not a viable investment opportunity going forward. Visolis and LCY Chemical certainly think it is, enough to buy, own, and operate the Sarnia plant. Throughout this entire bankruptcy and sales process, the silent elephant-in-the-room is that oil prices have continued to rise, the global population has continued to rise and, global energy and product needs both quality and quantity, are rapidly changing.
TOP VALUE ADDED CHEMICALS FROM BIOMASS
https://www.nrel.gov/docs/fy04osti/35523.pdf
- Koan
Visolis/LCY Chemical in their Letter Of Intent stated they will own and operate the plant at Sarnia, thereby making them a strategic buyer. This will also provide the necessary conditions for taking advantage of BioAmber's net operating losses. It's important to step back for a second, set aside what will or will not happen to BioAmber's shareholders, and understand that Visolis/LCY Chemical is going to continue carrying the torch of producing bio-based succinic acid and their derivatives.
Who would want the NOLs?
There are minimum necessary conditions which must be met by any purchaser in order to capture the value of NOLs. This is why certain large companies don't simply appear and buy everything up -- they have no interest in operating the company or meeting whatever annual limitations exist in order to reap those benefits. If they could take advantage of the losses and not be hassled with pesky conditions or operate the thing (i.e. "liquidator"), of course they would do so.
Second, after the SISP failed, PwC was forced to move to the next step, which they titled "Liquidation Process". Now, at some point in all the smoke and dust, the word "Process" was trampled over and left for dead. We can call it a liquidation without the process, but the monitor's reports state that the Liquidation Process still includes a search for and an opportunity for a strategic buyer. So, PWC moved to a Liquidation Process, but that does not mean the Visolis transaction is necessarily materially different than had it arose during the SISP.
Why does it matter?
PWC's primary task in this entire situation is to find the best outcome for as many stakeholders as possible. It would have been great if BioAmber never encountered bankruptcy, but now that it has, PwC is in charge of "navigating the ship" and, if possible keep it from sinking. That would be in the best interest of all stakeholders. Sure, they could throw out the life boats and save the upper class, leave the peasants for dead (Common Shareholders), and let the whole thing crash and burn, but stakeholders never needed PWC for that task -- BioAmber's previous management was doing just fine in that regard.
What about the Seventh Monitor's Report?
You have to hand it to PwC, they are clearly experts in what they do not say. We now have the Seventh Report and the first one post-transaction. There are three areas that are worth attention:
1. UPDATE ON THE VISOLIS TRANSACTION
2. MONITOR'S ACTIVITIES SINCE THE SIXTH REPORT
3. THE "CRANE LETTER"
First, taking things at face value, it appears all of BioAmber's assets sold for US$ 4.3 million. This would mean the redacted "black bar" on the Visolis LOI actually spelled out the word "million", versus using only digits. It would be interesting to see someone revisit that and see if "US$ 4.3 million" is the same as nine digits.
Next, the monitor's activities since the Sixth Report are reported as follows, and it is worth calling attention to 12.4, (although 12.2 and 12.3 are noteworthy as well):
PwC has been specific on nearly every other point, and yet here, where it would matter, they use language that is so vague it is questionable why they would even report it to the court, "...other administrative matters..." There is no reason to waste the court's time reporting "other administrative matters" unless it is of substance. And, wouldn't you know it, they immediately follow that phrase with "pursuant to the Monitor's expanded powers provided in the Third Amended and Restated Initial Order".
Was that language purposely vague? If so, there may be a few possible reasons that point to one of two opposite, yet very significant outcomes:
1. The Monitor, pursuant to their expanded powers granted by the court is in the process of notifying the necessary entities in order to inter alia cancel the shares of common stock; or
2. Pursuant to their expanded powers negotiating plans and approval of a reverse merger.
PwC has simply been too vague to know with certainty one way or the other. Still, either of these outcomes must be considered as possible.
So, the larger question after reading the Seventh Monitor's report still remains, "What will become of the Commons?". PwC is not explicitly stating one way or the other. In regards to the Crane Letter, they merely confirm shareholders will not receive upfront cash. They also (intentionally) did not include their full response back to Crane LLP.
The Crane Letter is significant because Crane LLP asked for a lot of information and they likely now have better insight on what is to come for shareholders than those of us only reading the monitor's reports.
If anyone has access to PwC's full response back to Crane LLP it would be great to read that in full.
Finally, no matter what side of the story a person subscribes to when it comes to BIOAQ, we have yet to hear in all of this commotion a single argument of why bio-based succinic acid is not a viable investment opportunity going forward. Visolis and LCY Chemical certainly think it is, enough to buy, own, and operate the Sarnia plant. Throughout this entire bankruptcy and sales process, the silent elephant-in-the-room is that oil prices have continued to rise, the global population has continued to rise and, global energy and product needs both quality and quantity, are rapidly changing.
TOP VALUE ADDED CHEMICALS FROM BIOMASS
https://www.nrel.gov/docs/fy04osti/35523.pdf
- Koan
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