UPDATED FOR REGEN VALUTION UNCERTIANTY - MY ANALYSIS OF TODAY’S EVENTS, DOT CONNECTING, AND NUMBER CRUNCHING:
I have become aware that the entity that did the deal with REGEN for $1 a share valuation (although I have not confirmed such, but trust the source) makes the $1 a share for REGEN HIGHLY SUPECT.
While I believe this pending transaction Is overall good for all involved, the $1 a share value on the REGEN piece (DETAILED BELOW) and the overall valuation assumptions I made need to be taken with a dump-truck full of salt!! It may or may not be the value that REGEN comands upon S1 registration and trading.
Ok Folks….KOOS really came through today in a HUGE way for not only us longs, but for the future of the company(s) in general, not to mention throwing a major wrench in the plans of ANY planned or existing shorters of the stock.
On the latter first off, the Regen stock dividend to BMSN shareholders of record as of a date in the very near term, yet to be determined, will cost them a pretty penny to have to pay those that are long the stock if they even can. When one goes short and there is a dividend, the shorters must PAY a dividend to those that are long. In this case of a stock dividend, they do not pay cash but rather must pay shares of REGEN stock to the longs. How can they do this as a) there currently have NO shares of REGEN stock available to be paid, and b) they would have to buy the REGEN stock on the market (or borrow it) to make said payment. They will not be able to fulfill this obligation and, as such, will have to wait until REGEN becomes a free trading ticker to acquire the shares to then pay to the longs. In reality this is not practical or feasible in the near terms as the O/S for REGEN at the time of the dividend issuance is 51.6M shares in total, with almost if not 100% of them outside the float. In a nutshell, this divvy maneuver alone should force whatever shorts there are in BMSN to cover prior to the soon to be announced Ex-Dividend date.
I am going to save my financial analysis of this transaction for the end, and jump right into the recent past (from 8k’s over the past month or so) and today’s 1-2 punch PR and 8k. It is 100% clear to me that management has created a full on new corporate structure that accomplishes a few fantastic goals…it sets up the company(s) to be much healthier from a shareholder and operational perspective going forward as well as effectively flushing the past down the toilet. Regen is the golden goose and has now been placed as such in the new corporate structure. BMSN for all intents and purposes is now nothing more than a 58.15% owner of REGEN with us longs being a roughly 38.75% direct owner. Going forward, REGEN will be the primary entity and the only entity generating value…management, by taking REGEN public, is assuring that avenue opens to them. BMSN will continue to reap the benefits as well, though their direct ownership of REGEN (which again will be at 58.15% or so as of the date of the public filing). This also provides for a FRESH and 100% clean share structure to move forward with, unlike that of BMSN currently…..being able to realize and unlock much more shareholder value than in the current BMSN share structure with all its prior worts. Another part of the beauty here is that all the toxic crap in BMSN (albeit much less than there was), stays in BMSN and does not in any way impede the natural and potentially booming progress that REGEN can and will make. I do foresee some further dilution of BMSN shares for the current toxics not yet converted, and it can also serve as a financing vehicle for REGEN that will NOT impact REGEN’s share structure directly. It could and will affect the shares we own directly in BMSN, however it will be more than mitigated by unlocking the true value of REGEN currently and over time….IMO, just ingenious!
NOW LET’S TALK THE NUTS AND BOLTS OF THE TRANSACTION(S): First off, I was completely ecstatic (for all the reasons outlined above concerning shorts and company strategy and share structure going forward) to read the PR that came out at 3:11pm today on its own. It made me start crunching numbers to see what it would all mean, and I was left with 1 monster question…VALUATION!!! Then shazam, that question was answered with the 8K issued at 3:45pm today….the old 1, 2 punch!
Here is how the DIVY will affect all of us longs….As stated in the PR, all common and preferred shareholders will be receiving, pro-rata, 20M shares of REGEN as of an ex-dividend date to be determined shortly. Per a call made to the TA today that I got from another post, the common O/S is about 2.393B (no change folks), and the preferred shares O/S as of the June 30 10Q were approximately 2.9M. So for ease and purposes of my math, assume the total O/S is at 2.5B shares. 20M shares dividend would result in 8,000 shares of REGEN for every 1Million shares owned of BMSN on the ex-date. Regen is also filing an S-1 registration statement to go public, and REGEN will then become free trading when this goes effective. Current BMSN longs will own 38.75% (20M shares) of Regen, BMSN will own 58.15% (30,010,000 shares) of REGEN and other holders will own the remaining 1.6M shares of REGEN (1.5 of which are owned by Caven Investments per the 8k filed on 9/9/13 per agreement dated 8/26/13 (THESE DATE ARE IMPORTANT!!). After the Dividend ALL CURRENT BMSN SHAREHOLDERS WILL STILL OWN THE SAME NUMBER OF BMSN SHARES THEY CURRENTLY OWN AS WELL.
This all sounded great, but the next question I had was what price would REGEN be valued and how would that valuation be determined. The 8K at 3:45 answered that question. In that filing today, an entity (ASC Recap, LLC) was repaid a $100k loan for 100,000 shares of REGEN…$1 a share!!!!!! (SEE DISCLAIMER ON THE $1 A SHARE VALUE ON REGEN AT THE TOP OF THIS POST). This tells me that the $1 a shares is at least the current valuation of REGEN on its own as documented by a third party transaction (I HAVE PERSONALLY NOT DONE ANY DD ON THE ENITITY FOR THIS TRASACTION). It could be more even as these types of transactions are typically and often done at a discount (as we have seen). As the Caven transaction for REGEN shares happened at the end of August, it is perfectly clear to me that taking REGEN public was in the works by at least that time if not before…bringing the possible go-public date as soon as 4-6 weeks from now, and maybe sooner.
Based on the all the above, assume you have 1Million BMSN shares and the $1 REGEN valuation is correct. On the ex-date, you would then own 8,000 shares of REGEN and 1 Million shares of BMSN. The Regen direct shares would be worth $8,000 and the BMSN shares would be worth $.012 a share or $12,000….or your current 1M BMSN shares at .002 close today valued at $2,200 would now altogether have a $20,000 value! I get the $.012 value for BMSN based solely on its pass-through ownership of REGEN with a valuation of $51.6Million ($1 x the 51.6Million shares outstanding) and BMSN will own 58.15% of REGEN or an asset worth about $30Million. Divide that by 2.5Billion shares and you get $.012 for BMSN shares…..THIS IS CALLED UNLOCKING SHAREHOLDER VALUE!
This all also tells me that the Hema IND is close and that the MIN IND filing is about to happen, this the roughly $50M valuation that has already been transacted upon with REGEN….easy to connect those dots as REGEN would not be worth anything near that if things were about to come to fruition.
