Old PSG Wind Down (PSGLQ) – Liquidation – 24%-43% upside

Current Price – $0.42

Offer Price – $0.52-$0.6

Upside – 24% – 43%

Expiration Date – 12th of December, 2017

Liquidation Plan

This idea was shared by Chuck.


Performance Sports Group went bankrupt a while ago and they sold the brands off pretty quick, enough to pay the creditors and have some money left over for the common stock.  The creditors objected that the common stock was now owned by speculators (the float turned over many times since the bankruptcy) but the court said “no.”

So, a vote is coming up for the equity holders in what they call the P7 equity class. According to the court docs, the left over money per share for the P7 class is going to be “Pro Rata share of Shareholder Distributable Assets, which is anticipated to be within a range of $0.52 to $0.60 per share “

Vote is due on the 12th of December and payout would likely be quick:
– Current liquidation plan is the result of settlement agreement reached by involved parties, particularly with the Plumbers & Pipefitters National Pension Fund, which sued the company on securities fraud basis. To avoid a long litigation this was the solution. Thus the involved parties seem be to be interested in cashing out asap.
– Secured already get 100%. Unsecured are taking a haircut. If they don’t vote yes they will get eaten up by the bankruptcy;
– US and Canada are both working on the bankruptcy at the same time and any kind a litigation will completely destroy anybody that wants to sue because they would have to sue in both jurisdictions;
– Risk is that the unsecured votes ‘no’, but if they vote no they probably won’t get anything.
Court documents can be found here.


10 thoughts on “Old PSG Wind Down (PSGLQ) – Liquidation – 24%-43% upside”

  1. My main concern here is that there is no info on how the $0.52-$0.6/share was calculated and what kind of assumptions were made regarding further liquidation expenses and payouts for unsecured creditors. So I am not sure how accurate is the $0.52-$0.6/share estimated distributions for equity holders.

    Couple point to note:
    – Tables at the bottom of the liquidation plan show the estimated balance sheets for Parent and subsidiaries. The value for equity holders at the Parent level (P7 only gets distributions at Parent level) is indicated at $17m-$22m which works out to $0.37 – $0.48 per share.
    – Also the same the same equity distributions were indicated in previous bankruptcy fillings, before the settlement with the pensions fund was reached (in those bankruptcy plans it was clearly stated that “the Purported Securities Class Action Claim shall have been disallowed and expunged in its entirety or estimated at $0.00”). So the process is taking longer than initially expected, pension fund gets a portion of the pie, but equity distributions remain unchanged after the settlement.

    I am not able to reconcile these items and if anyone with more experience in bankruptcy liquidation can shed some light on this, it would be very helpful.

    • It’s trading around .38 now, so that hits the lower part of the range you were looking at.

      As I mentioned, this one is a little hairy but the lead plantiff on the equity side is the pipe fitter’s union. They are holding the unsecured and the secured hostage by threatening a lawsuit. So the way the equity is getting funded is by the unsecured getting a haircut and paying off the pipefitter’s union to not hold up all of the claims.

      If I was a betting man, I bet if there were any secured claims left they would also kick in a few bucks in order for the pipefitters to not hold up the bankruptcy process.

  2. Voting Record Date: October 19, 2017

    Does that mean if you buy after record date, P7 cannot elect and stuck with default Option 2?

    • Where do you see voting record date being Oct 19th and why do you prefer Option 1 vs Option 2?

  3. Voting record date on PrimeClerk website under Information Center: https://cases.primeclerk.com/PSG/EBallot-Home

    Option 2 oriented toward tax treatment for Canadian holders and Option 1 for US.
    Option 2 you retain Parent Equity Interests. Do not see any mention of “right to receive pro rata share of any other Shareholder Distributable assets” as with Beneficial Trust Interests received through Option 1.

  4. If you do not (or cannot ) vote, defaults to Option 2.

    • PrimeClerk should be able to clarify re voting and Option choice deadlines.
      For me the key question is whether the indicated distributions of $0.52-$0.6 are still valid.

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