Current Price – $0.58
Unaffected share price – $0.7 – $0.8
Upside – 18%-30%
Expiration Date – TBD
This idea was shared by Vladimir.
Stanley Furniture in its press-release on March 2, 2018 announced that it approved to sale mostly all of its assets becoming effectively cash shell. The company will also be delisted from Nasdaq on March 15th, which likely caused the recent sell-off.
The math is simple:
- Cash portion of proceeds $10.8m
- Notes: $7.4m at 6% interest rate, principal paid in 5 year since Completion (take at face value)
- Retained cash $0.8m (out of which $0.6m is restricted cash)
- Credit repayment $1.3m
- Transaction costs: $2.7m
- Golden parachutes: $2.0m (info on page 47)
This results in net-net value of $13.0m ($0.87 per share) and also add NOL value (total NOL accounts for $21.8m) of c. $4.6m.
Historical SG&A was around $0.4-0.6m, but I believe company can shrink its cost below the historical levels.
The interesting part in this situation is company notice on March 8, of delisting from Nasdaq, which caused a sell off from institutional players. Surprisingly for such micro cap you will find out that traditional investment managers account for 26% of share capital (Blackrock, Vanguard, UBS asset management, etc.), which probably are forced to sell in case of company delisting.
So, I believe that upside here is at least previous level of market cap ($10-11m or $0.7 per share or 18% upside) before the news of delisting.