everett7,
I get your point regarding unlimited upside. However, I think you are too optimistic with how big that upside is. If the equity committee is arguing for $212 million. I would imagine that's the number you should peg total enterprise value. Let's say that they are able to discharge $10 million of the $15mm disputed prepetition lender claims (I used $10mm because the 7th and 8th Amendment occurred after Bayside took over, 6th and earlier happened prior to Bayside involvement).
$212mm - $167mm (177mm claims less $10mm) - $18mm (preferred) = $27mm
At 12.4 cents per share for the common or $3.84mm market cap, this is 7.0x upside versus let's say you have to pay $4 for the preferred, the preferred still represents 6.5x. But the preferred gets paid first. In an outcome where the total firm value is $185 or less, you will be very glad that you owned preferred rather than the common. It's hard for me to imagine that there will be 20-30x upside. For 20-30X upside for the common, you need total enterprise value to be $261mm to $300mm. I am not comfortable with those figures when the equity committee is arguing for a $212mm valuation.
Any sorts of breach of fiduciary? How much is that worth? $10mm? That's another 2.6x return based on a 12.4 share price. We have accounted for the lender claims being thrown out. Any upside in common upon re-org, I think that's a separate trade. You're making a business bet for the long run in that scenarior. As a sanity check, to get 20x upside for the common which equates to a $261mm valuation, you need DiscoverReady to be worth about $165 to $205mm assuming rest of portfolio is about $95mm for Counsel Press, NDEX notes receivable, NOL, Business Information, Real Estate, Minority Stake in Detroit Legal News, and Tax Receivable.
That is too Rich of a valuation for Discover Ready. I think a $120-$150mm valuation for DiscoverReady is more reasonable.
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