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.
Thursday, November 4, 2010
Monday, November 1, 2010
Greenlight Capital Q3 2010 Letter
See the latest and greatest from David Einhorn. Enjoy. Unfortunately I can not embed it here so I to view the letter please follow the link.
Link
Link
Wednesday, October 27, 2010
Latest Missive from GMO
Below please find the latest and greatest from Jeremy Grantham and GMO.
Enjoy.
GMO Capital - 10-27-10
Enjoy.
GMO Capital - 10-27-10
Monday, October 25, 2010
Graham & Doddsville Fall 2010
The latest from the fine students at Columbia. For those of you who don't read this I recommend starting. They do a good job of getting good interviews and the ideas that come out (2 per issue) are decent enough. Another good resource that a prudent investor would be foolish to not take advantage of.
Enjoy:
Graham & Doddsville Fall 2010
Enjoy:
Graham & Doddsville Fall 2010
Wednesday, October 13, 2010
David Einhorn's Presentation from Value Investing Congress
Hot off the presses - David Einhorn's presentation (short thesis on JOE) from the Value Investing Congress. Enjoy.
Green Light Capital_Field of Schemes_10!13!10
Green Light Capital_Field of Schemes_10!13!10
Friday, October 8, 2010
Liberty Acquisition Warrants
This situation has three components to it:
1) Grupo Prisa (PRS.MC), which closed (10/7) at 1.68 euros, or $2.335 (at EUR to USD of 1.39:1)
2) Liberty warrants (LIAWS), $1.63
3) Liberty stock (LIA), $10.29
First some background:
Grupo Prisa was founded in 1972, as the editorial company of daily newspaper El País. Prisa's activities are classified under generalist press (El País), specialized press, radio (11%), educational publishing (17%), and television (18% Telecinco and 56% Digital+). Post recent transactions to reduce the group's debt pile, we think the group's most important assets are its holding in Digital+ and then Santillana, its educational publishing business. As such, it is less of an advertising play than historically.
Liberty Acquisition Holdings Corp. is a publicly traded company formed for the purpose of effecting a business combination with one or more operating businesses. Liberty completed its initial public offering of 103,500,000 units at $10.00 per unit in December 2007. Each unit was comprised of one share of common stock and one half (1/2) of one warrant to purchase a share of its common stock.
Prisa initially announced in March 2010 that they had reached an agreement with Liberty Acquisition Holdings in which Prisa would buy 100% of Liberty through an exchange of shares Prisa shares valued for a total consideration of €660m - implying that Liberty obtained a >50% stake in Prisa and the Prisa controlling shareholders would have been diluted to c30% (but according to the agreement would not lose control). Since then the deal has been amended twice. Below is the most recent iteration:
Prisa’s syndicate of banks had agreed to extend its current bridge loan (€1.9bn) to May 2013 if certain conditions were met; of which the most important, in our view, was a capital injection of at least €450m. The Liberty transaction assures a US$870m injection (€680m). Prisa announced on August 4, 2010 a revised structure to the Liberty deal
(initially announced in May 2010) that practically assures that the deal is approved.
In summary, in exchange for the US$870m cash, Prisa shall:
1) LIA shares: Issue 1.5 ordinary shares; 3.0 non-voting convertible shares (NVCS) and $0.50 cash for each LIBERTY share.
— For the NVCS, there is mandatory conversion in 3.5 years (Each NVCS converts to 1.33 shares of common stock for common prices below €1.50, 1.0 share for stock prices above €2.00, and a conversion ratio of [2.33 – (2 * Stock Price)/3)] for stock prices in between €1.50 and €2.00); they receive €0.175 minimum dividend per annum
2) LIA warrants: Issue 0.45 ordinary shares and $0.90 cash for each LIBERTY warrant
I am advocating a purchase of the warrant. Based on Prisa’s 10/8 close and the EUR/USD conversion rate at that time each LIA warrant receives:
$0.90 + (0.45 x (€1.68 x 1.39 (conversion rate))) = $1.95 vs. a current share price of $1.63. The current spread implies a profit of 20% - this can be increased should the underlying security (Prisa) move up in value.
The main risk to the warrants is if the deal falls through. The risk of the deal falling through is limited, as Prisa has secured US$500m interest and the deal terms are attractive to Liberty shareholders. In order for the deal to be approved, at least 70% of Liberty shareholders (excluding Sponsors) need to give their approval. With the secured US$500m only another 20% of shareholders need to give their consent.
The approval of the deal should enable Prisa to refinance its Balance Sheet and management (with the help of the Liberty management) to focus on its operating
business. Additionally free-float and disclosure should also increase – this last point is key as Prisa has been mired by a single dominant family owner who many believed was more interested in empire building than in maximizing shareholder value.
While the transaction does reduce the level of debt (through asset sales which are contingent upon the merger plus the large cash influx from LIA) the pro-forma entity will remain highly levered. A slide presentation has been provided that estimates net debt declines from €4.75 billion to €3.25 billion, equivalent to 5.2 times TTM EBITDA.
It can be seen here:
http://www.sec.gov/Archives/edgar/data/1407539/000095012310084024/g24574exv99w1.htm
It also gives a good overview and a recommend reading it.
On a total enterprise value basis it will trade around 7x EV/EBITDA not a screaming buy but fairly valued and its leaves room for upside as operational efficiencies and deleveraging occurs.
Overall you have a chance to lock in a good return – you could hedge if you wanted but I think Prisa’s stock is interesting enough that I would rather have the beta risk. I was going to expound more on this here but its late – just know that Prisa is a force to be reckoned with on the Spanish-language media scene. The conglomerate operates in newspaper and book publishing, radio broadcasting, and pay TV services in Spain and Latin America. They will benefit as ad rates and consumption returns to normal in Europe.
1) Grupo Prisa (PRS.MC), which closed (10/7) at 1.68 euros, or $2.335 (at EUR to USD of 1.39:1)
2) Liberty warrants (LIAWS), $1.63
3) Liberty stock (LIA), $10.29
First some background:
Grupo Prisa was founded in 1972, as the editorial company of daily newspaper El País. Prisa's activities are classified under generalist press (El País), specialized press, radio (11%), educational publishing (17%), and television (18% Telecinco and 56% Digital+). Post recent transactions to reduce the group's debt pile, we think the group's most important assets are its holding in Digital+ and then Santillana, its educational publishing business. As such, it is less of an advertising play than historically.
Liberty Acquisition Holdings Corp. is a publicly traded company formed for the purpose of effecting a business combination with one or more operating businesses. Liberty completed its initial public offering of 103,500,000 units at $10.00 per unit in December 2007. Each unit was comprised of one share of common stock and one half (1/2) of one warrant to purchase a share of its common stock.
Prisa initially announced in March 2010 that they had reached an agreement with Liberty Acquisition Holdings in which Prisa would buy 100% of Liberty through an exchange of shares Prisa shares valued for a total consideration of €660m - implying that Liberty obtained a >50% stake in Prisa and the Prisa controlling shareholders would have been diluted to c30% (but according to the agreement would not lose control). Since then the deal has been amended twice. Below is the most recent iteration:
Prisa’s syndicate of banks had agreed to extend its current bridge loan (€1.9bn) to May 2013 if certain conditions were met; of which the most important, in our view, was a capital injection of at least €450m. The Liberty transaction assures a US$870m injection (€680m). Prisa announced on August 4, 2010 a revised structure to the Liberty deal
(initially announced in May 2010) that practically assures that the deal is approved.
In summary, in exchange for the US$870m cash, Prisa shall:
1) LIA shares: Issue 1.5 ordinary shares; 3.0 non-voting convertible shares (NVCS) and $0.50 cash for each LIBERTY share.
— For the NVCS, there is mandatory conversion in 3.5 years (Each NVCS converts to 1.33 shares of common stock for common prices below €1.50, 1.0 share for stock prices above €2.00, and a conversion ratio of [2.33 – (2 * Stock Price)/3)] for stock prices in between €1.50 and €2.00); they receive €0.175 minimum dividend per annum
2) LIA warrants: Issue 0.45 ordinary shares and $0.90 cash for each LIBERTY warrant
I am advocating a purchase of the warrant. Based on Prisa’s 10/8 close and the EUR/USD conversion rate at that time each LIA warrant receives:
$0.90 + (0.45 x (€1.68 x 1.39 (conversion rate))) = $1.95 vs. a current share price of $1.63. The current spread implies a profit of 20% - this can be increased should the underlying security (Prisa) move up in value.
The main risk to the warrants is if the deal falls through. The risk of the deal falling through is limited, as Prisa has secured US$500m interest and the deal terms are attractive to Liberty shareholders. In order for the deal to be approved, at least 70% of Liberty shareholders (excluding Sponsors) need to give their approval. With the secured US$500m only another 20% of shareholders need to give their consent.
The approval of the deal should enable Prisa to refinance its Balance Sheet and management (with the help of the Liberty management) to focus on its operating
business. Additionally free-float and disclosure should also increase – this last point is key as Prisa has been mired by a single dominant family owner who many believed was more interested in empire building than in maximizing shareholder value.
While the transaction does reduce the level of debt (through asset sales which are contingent upon the merger plus the large cash influx from LIA) the pro-forma entity will remain highly levered. A slide presentation has been provided that estimates net debt declines from €4.75 billion to €3.25 billion, equivalent to 5.2 times TTM EBITDA.
It can be seen here:
http://www.sec.gov/Archives/edgar/data/1407539/000095012310084024/g24574exv99w1.htm
It also gives a good overview and a recommend reading it.
On a total enterprise value basis it will trade around 7x EV/EBITDA not a screaming buy but fairly valued and its leaves room for upside as operational efficiencies and deleveraging occurs.
Overall you have a chance to lock in a good return – you could hedge if you wanted but I think Prisa’s stock is interesting enough that I would rather have the beta risk. I was going to expound more on this here but its late – just know that Prisa is a force to be reckoned with on the Spanish-language media scene. The conglomerate operates in newspaper and book publishing, radio broadcasting, and pay TV services in Spain and Latin America. They will benefit as ad rates and consumption returns to normal in Europe.
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