Current Price –$0.92;
Expected distributions - $1.08 - $1.25;
Upside – 15% to 35%;
Distributions are expected to be completed by Q4 2016 or beginning of Q1 2017 (within 6 months). Funds will be distributed only for record holders as of 30th of August.
Caution: The below listed idea involves company in bankruptcy and therefore is more complicated and risky than the usual ideas posted on this site. Please due your own due diligence before investing.
BINDQ is a bankruptcy liquidation story with all the assets having been sold (to Pfizer in July 2016) and majority of employees terminated/transferred. The company has no current operations and currently exists only to distribute remaining assets among creditors and equity holders.
Estimation of liquidation proceeds for equity holders:
The numbers in the below are based on the Plan of Liquidation (August 15th, 2016), and might not be final. However margin of safety seems to be large enough for shares to be attractive at current prices. Refer to pages 32-34 of the liquidation plan for further details.
Cash (August 15th) - $28m
Receivables and Security Deposit (August 15th) - $5.2m
Total assets to be distributed - $33.2m.
General Unsecured Claims (August 1st) - $5.2m
Priority Tax Claims (August 1st) - $0.207m
Further expected expenses (after August 1st) - $2m
Cowen success fee - $1.5m (based on Docket #378)
Total claims and expenses before equity distributions - $8.9m
Remaining equity distributions: $24.3m
Shares outstanding 20.9m
Expected equity distribution per share $1.16 (vs current price of $0.92 or 26% upside).
Additional upside comes from $1.975m holdback held in escrow till Dec 1st 2016 pursuant to the asset sale agreement to Pfizer. BINDQ's receipt of some portion, or the entire amount, of the holdback depends on the claims, if any, asserted by Pfizer against the holdback prior to December 1.
Remaining equity distributions including holdback: $26.3m
Shares outstanding 20.89m
Expected equity distribution per share $1.26 (vs current price of $0.92 or 35% upside).
Wall Street Journal had a slightly lower estimate of total equity distributions $22.5m - equivalent to $1.08 per share - this estimate was based on figures before the recent August Liquidation Plan, which overall showed lower cash burn then initially projected.
There might appear some other claims which are not yet included within the 'General unsecured claims' section - Creditors have till 30th of August to file any further claims and till 14th of September to dispute the current liquidation plan. However, I do not foresee any further material increases in claims. Some details in the 10Q give confidence about this. E.g. in the latest 10Q, it is noted that so far the company received only $7.5m in scheduled and asserted claims, out of which $5.1m have already been paid or cured by the 12th of August (I assume the remaining balance is covered in the $5.4m of 'General Unsecured Claims'). Claimants had almost 4 months since the bankruptcy in May 2016 to file their claims, so my guess is that anyone who wanted to file, has already done so. Any unexpected new claims should be immaterial.
Overall claims need to increase by more than $5m (or double the currently outstanding general claims) for the equity investors to start loosing money at the current share prices.
Equivalently, equity investors will start loosing money at the current share prices, only if zero of the indicated receivables (part of which is security deposit) are received.
Seems like a rather safe bet, but as I have limited experience in bankruptcies, my thoughts should be taken with the grain of salt.
Caution: This idea involves company in bankruptcy and therefore is more complicated and risky than the usual ideas posted on the site. Due your own due diligence before investing and do not consider anything written on this site as an investment advice.