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Thursday, November 4, 2010

EDCI and the tale of approx $100 free.

his is an idea for a personal account only with a very short time frame. The ticker is EDCI.

Basically the trade has to be made today. The company is doing a go private and they are conducting a 1,400 to 1 reverse split then another forward split. The goal of this is to shake out all holders with less than 1,400 shares bringing their total number of shareholders below 300 which relieves them of reporting status. They will be purchasing all shares from holders with less than 1,400 shares for $3.44 vs. a current price of $3.35. This 2.7% spread is pretty paltry, but when annualized with the estimated 1 month it will take to receive the cash it’s a not too shabby IRR of 38%.

Basically per trade it’s around $100 free money (net of trading fees).

EDCI Holdings, Inc. (“EDCI”), the majority shareholder of Entertainment Distribution Company, LLC (“EDC”), a European provider of supply chain services to the optical disc market, is a company engaged in a final Plan of Complete Liquidation and Dissolution. EDCI provides supply chain services to the world’s best-known music, movies and gaming companies. EDC’s mandate is to be the pre-eminent independent and autonomous supply chain service provider to the entertainment industry and the retailers who deal directly with consumers.

The Plan of Dissolution was approved by EDCI’s shareholders at a Special Meeting held on January 7, 2010. Accordingly, EDCI commenced the voluntary dissolution, liquidation and winding up of the Company in accordance with Delaware law. On November 3rd the Company announced that, based on current voting results indicating more than a majority of EDCI’s outstanding stock had been voted in favor of the Split Transaction, it had filed a Form 25, Notification of Removal from Listing and/or Registration under Section 12(b) of the Securities Exchange Act (the “Exchange Act”), with the SEC and NASDAQ. EDCI expects its common stock will be quoted in the over-the-counter market on the Pink Sheets beginning November 4, 2010. On or about the effective date of the NASDAQ delisting, which is expect to be November 13, 2010, the Company intends to file a Form 15, Notice of Termination of Registration or Suspension of Duty to File, with the SEC to terminate its reporting obligations under the Exchange Act.

So basically you have a quick time to be a shareholder of record as of November 13 then you get the quick proceeds.

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