Here is the major info on CDC Corp.
Despite the initial numbers of CDC, which had some consolidated information, here is the correct numbers from the Schedules filed in the case on November 7, 2011.
Total assets per schedule A of $172.5 million. This includes $160.4 million for the interest in their subsidiaries. This includes CDC Software.
Total debts are $108.5 million, which includes $66.8 related to litigation by Evolution CDC and $40.0 million in Intercompany obligations to CDC Software. The $66.8 million is litigation and CDC disputes parts of this and has a counter claim. The 6-K filed on the sale of CDC Software specifically states all Intercompany amounts owed by CDC will be cancelled. At a minimum, this resolves $40 million in debt.
So a worst case scenario would be assets of $12.1 million if the entire $160.4 million related to CDC software and that would be very unlikely.
CDC will get more than $250 million for the sale of CDC Software.
A worst case scenario would be debts of $68.5 million if the litigation claim actually results in a $69 million damage award.
Per the Chapter 11 filing, the O/S shares are 35,180,685.
$250,000,000 + $12,100,000 = $262,100,000
$262,100,000 - $68,500,000 = $193,600,000
$193,600,000 / 35,180,685 = $5.50 per share.
Upsides to the above are that the actual value of all remaining subsidiaries exceeds the zero dollar value included above for BV of CDC’s interest in them and the large claim for litigation is significantly less than listed above. There seems to be little downside to the $5.50 number.
The pending legal dispute in the Chapter 11 case is whether to go forward with the $250 million sale of CDC Software or just sale a part of that company and operate the rest of CDC software as a going business. This is bases on whether selling just a part is worth more to the shareholders of both CDC Corp and CDC Software. So in theory, a ruling that alters the course would be more profitable to CDC. If they move forward with the $250 million sale of all of CDC Software, this would be thru establishing that offer as an initial bid and there would be an auction to see if any other buyers step in with a better offer. This again would be more upside.
Conclusion is anything up to about $6 here looks like a decent buy.
Three key things to read besides the general information in the 6-K to support all of the above.
The Bankruptcy Schedules on assets and debts filed on November 7, 2011 that show the numbers above. The section of the transcripts in the 6-K where the judge specifically talks about CDCA only having two real liabilities in the judgment against them and the Intercompany amount owed to CDC Software. The sections of the purchase agreement in the 6-K where it specifically says CDC is getting $10.50 per share of their stock and that all Intercompany obligations are cancelled.
SECTION 1.02 PURCHASE PRICE. In consideration of the aforesaid sale, assignment, transfer and delivery of the CDC Software Shares, Purchaser shall, at the Closing, pay, or cause to be paid to Debtor an amount, in cash, by wire transfer in same day funds denominated in U.S. dollars, of $10.50 per share totaling $249,788,301.00 (the “Purchase Price”).
SECTION 8.01 INTERCOMPANY OBLIGATIONS. The parties contemplate that all amounts due to or from Debtor or Software International on the one hand and any of the CDC Software Companies on the other hand (“Intercompany Obligations”) will be terminated as of the Closing. The terms and documentation related to such termination shall be mutually agreed by the parties hereto. The parties further agree that, without the prior review and consent of the Purchaser (i) the equity and debt of the CDC Software Companies shall not be restructured or recapitalized in any manner and (ii) any intercompany agreements among the CDC Software Companies shall not be amended or restated in any manner.
Canceling the $40 million debt owed by CDCA adds over $1 more to all the rest of the numbers.
