Moatable Inc ADR (MTBLY)

[Chrysanthemis]

Thank you - the legal and administrative costs were indeed part of the information I was missing. For the record, and to serve as food for thought for other forum dwellers, below my thoughts on the current share price.

In somma, as I read the settlement, the ADS may currently be spectacularly underpriced, despite its recent surge. And we do not need to dig further into the settlement than its fourth page - here a link for easy reference:

https://ir.renren-inc.com/static-files/9ce86392-176c-4ca3-a287-98a2ffb5f0a5

I have entered some line breaks in the quote below to make things clearer, at least for myself:

"In connection with the Settlement, the Defendants will create a common settlement fund (the “Settlement Fund”), which amount, before any reductions for Settlement Fund Expenses (as defined below), will be the greater of

$300,000,000

or the sum of

(a) $38.6866 per ADS (as defined below) multiplied by the number of issued and outstanding ADSs held by Renren Shareholders as of the Record Date (as defined below)
and
(b) $0.859701 per Class A ordinary share multiplied by the total number of issued and outstanding Class A ordinary shares held by Renren Shareholders as of the Record Date.

“Settlement Fund Expenses” include:

(i) any taxes payable on any income generated by the Settlement Fund;
(ii) notice costs, distribution costs, and administration expenses;
(iii) any attorneys’ fees and expenses awarded by the Court to the Plaintiffs’ counsel;
(iv) any other fees and expenses awarded by the court; and
(v) any administrator fees associated with the Settlement.

Renren Shareholders, defined as holders of Renren’s Class A ordinary shares and American depositary shares (“ADSs”), each currently representing 45 (sic!) Class A ordinary shares, as of the Record Date but excluding the Defendants and D&O Releasees (as defined below) will be entitled to receive a pro rata share of the Settlement Fund, after deducting the Settlement Fund Expenses. “D&O Releasees” are individuals that served as Renren directors and/or officers in June, 2018 and specifically identified as D&O Releasees in the Stipulation."

So into the Fund goes 38.7 USD for every ADS and 0.86 USD per Class A ordinary share held by Renren shareholders at the record date. Note that the 38.7 USD is exactly 45 times the amount indicated for each Class A share.

Then some expenses are deducted. Assume perhaps 10% (30 MUSD) as you suggest (and your guess is clearly magnitudes better than mine).

And then the fund is divided pro rata between the very same shareholders, because the definition of "Renren shareholder" used to determine the value of the fund is the same as the one used to determine who is entitled to money from it.

And unless I miss something, it therefore seems mathematically certain that there will be 0.86 USD in the Fund for each Class A share held by an eligible shareholder at the record date, and that consequently that same shareholder can count on getting 0.86 USD per Class A share from the Fund (minus expenses), each ADS counting as 45 Class A shares.

This is also supported by the final part of point 8 of the document (page 21):

The Administrator shall pay or direct the payment to each of the record shareholders as of the Record Date, excluding the Defendants and D&O Releasees, such record shareholder’s pro rata portion of the Net Settlement Amount, which shall be not less than the amount of $0.859701 per share - or $0.826746, if, as set forth below in Section F, Duff & Phelps does not pay the Duff &Phelps Contribution thereby triggering the modification of the True Up definition as set forth in paragraph 4 — before any reductions for Settlement Fund Expenses.

On this basis, the settlement would actually be worth some 38 USD per ADS (minus expenses of, say 5 USD), and the share price should appreciate by roughly one third from current levels, prudently assuming that the rest of Renren is completely worthless.

But the share trades at 25 USD, very precisely, so there may be something wrong with this line of reasoning.