tag:blogger.com,1999:blog-2080506270244832638.post8913839735654877903..comments2024-03-28T07:17:13.573-05:00Comments on Clark Street Value: Communication Systems: Liquidation with a Speculative KickerMDChttp://www.blogger.com/profile/10679835609782815537noreply@blogger.comBlogger52125tag:blogger.com,1999:blog-2080506270244832638.post-85980385945895817172022-05-23T17:56:43.640-05:002022-05-23T17:56:43.640-05:00$PEGY lists CVR liability as $7.5 would be a good ...$PEGY lists CVR liability as $7.5 would be a good outcome. Bought at $9 and sold at $7.5. So a cost of $1.5 for the CVR for me. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-60980604078046120772022-03-29T04:48:56.176-05:002022-03-29T04:48:56.176-05:00Merger is completed and record date for the CVR re...Merger is completed and record date for the CVR remains as last Friday<br /><br />https://markets.ft.com/data/announce/detail?dockey=600-202203281833BIZWIRE_USPRX____20220328_BW5832-1<br /><br />The process is a bit strange though because people who purchased on Thursday and early Friday did not know that they are buying the company without the CVR (which makes up a substantial part of the overall firm value).Lupo Lupusnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-3170297434223663862022-03-26T11:33:45.097-05:002022-03-26T11:33:45.097-05:00Not so sure about the offsetting effect, on announ...Not so sure about the offsetting effect, on announcement of the vote (and the CVR record date) the stock hardly moved. Remember the CVR is a large part of MCAP (about 80% for a pre-split CVR value of around 1.8) so they stock should drop a LOT following the announcement of the record-date (implying that the stock already trades ex-CVR).<br /><br />My take is the following: The company already announced three days ago that they essentially have all the votes (I think they were something 0.3% short) so investors already anticipated that the merger goes through. Hence no surprise at all yesterday, reflected in the fairly mute stock price. And regarding the ex-date, I would not be surprised if this gets adjusted to Tuesday. FINRA has this rule that for large distributions, the ex-date is following the payment date so maybe the ex-date will be Monday or Tuesday.Lupo Lupusnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-59122158515674481432022-03-25T17:54:49.502-05:002022-03-25T17:54:49.502-05:00You are right. The reason stock didn't move mu...You are right. The reason stock didn't move much because loss of CVR for those buying today is offset to a degree the relief from vote passing and the fact that the company is not on the hook for merger related expenses which they would have been if the merger failed. <br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-44570932980285702002022-03-25T17:22:14.087-05:002022-03-25T17:22:14.087-05:00https://www.sec.gov/Archives/edgar/data/22701/0000...https://www.sec.gov/Archives/edgar/data/22701/000089710122000323/csi220407_ex99-1.htm<br /><br />What I dont understand, they set the record date for the CVR to today (March 25th), shouldnt the stock trade down big time today given T+2 settlement? In other words, sellers today should still receive the CVR? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-61841953745342559022022-03-25T10:45:58.727-05:002022-03-25T10:45:58.727-05:00Amazing, they got the 2/3rds needed for proposal #...Amazing, they got the 2/3rds needed for proposal #1 without Gabelli. Stock should move up.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-4893065831567677882022-01-12T16:46:33.287-06:002022-01-12T16:46:33.287-06:00The plot thickens! Yeah, to me, seems late in the...The plot thickens! Yeah, to me, seems late in the game to come out against the merger, not sure what the alternative looks like right now?MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-18154323360878748632022-01-12T15:41:22.705-06:002022-01-12T15:41:22.705-06:00Gabelli intends to vote against the merger
https:...Gabelli intends to vote against the merger<br /><br />https://www.sec.gov/Archives/edgar/data/22701/000080724922000016/jcs_21.htm<br /><br />Not sure what their game is, it seems one loses the optionality from the Pineapple investment in this way.Lupo Lupusnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-38759616210745146782021-12-30T16:17:13.754-06:002021-12-30T16:17:13.754-06:00No, I think that's correct. The CVR will be m...No, I think that's correct. The CVR will be mostly the S&S Segment and Lantronix earnout if any.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-87825866835692118712021-12-30T11:12:03.181-06:002021-12-30T11:12:03.181-06:00Yeah if you discount the Lantronix earnout then yo...Yeah if you discount the Lantronix earnout then you're definitely correct on valuation. I really don't know what value to assign Pineapple, that $2 a share peg could be realistic. They will have some capital available to them. Maybe the right way to think about it is using a similar model you would for a biotech startup? They will most likely be cash flow negative for some time before they see returns on their investment. Like you said in your original post, they could catch a bid in market craziness. Im buying but this will be far from a major position for sure. <br /><br />Side Note: What do you think would be going in the CVR at this point? I would take the position that at least another $1.25 gets returned Pre-CVR based on the sales of the real estate and cash on Balance Sheet... or do you think I'm beyond optimistic? Moso6881https://www.blogger.com/profile/00701534611511990053noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-90252717516365790252021-12-30T09:33:05.766-06:002021-12-30T09:33:05.766-06:00Sorry, missed this, but yes, that sounds direction...Sorry, missed this, but yes, that sounds directionally right.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-68817183646572727472021-12-30T09:30:42.441-06:002021-12-30T09:30:42.441-06:00I'm coming up with a lower value:
About $0.64...I'm coming up with a lower value:<br /><br />About $0.64/share of cash and investments<br />About $0.51/share for Ecessa, IVDesk, JDL (S&S Segment), this is just a guess, probably too low as CSI paid $4.67 for Ecessa in May 2020 and $1.37MM for IVDesk in Nov 2020, both seem to be doing well and masked by JDL losing the big education contract.<br /><br />$0.78/share in real estate sales, the benefit here is the HQ sale should close prior to the merger closing and get paid out as a dividend versus being included in the CVR which had its maturity date pushed out from 18 to 24 months, that impacts the IRR.<br /><br />Then we have the Lantronix earnout, hard to know the chances of that hitting, but open to others thoughts there. But let's say 50%, that gets me a total of $2.27/share in pre-PEGY merger dividends and/or CVR.<br /><br />The proxy had a concept around a "Convertible Note Financing" where Pineapple was free to raise additional cash at a $2/share value. So if they're able to do that, then maybe its $4.27/share of overall value versus today's price of $2.38? Yeah cheap. But there have been several disappointments along the way here and hard to have confidence in Pineapple, the proxy statement made it seem like little more than a calling list. I am still interested.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-320335697412605772021-12-29T11:04:37.461-06:002021-12-29T11:04:37.461-06:00I'm out of the stock, but give me a day, it mi...I'm out of the stock, but give me a day, it might be interesting again here.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-16960919960378833202021-12-29T09:59:48.903-06:002021-12-29T09:59:48.903-06:00MDC, What are your thoughts on this currently? See...MDC, What are your thoughts on this currently? Seems from a high level there is still roughly $3 of value vs current $2.30 price. Plus any kicker on the Pineapple being worth above 0. Moso6881https://www.blogger.com/profile/00701534611511990053noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-9195712055522620332021-12-19T17:58:52.548-06:002021-12-19T17:58:52.548-06:00Could somebody walk me through the PIPE investing ...Could somebody walk me through the PIPE investing deal in laymen terms? <br /><br />The PIPE investors get (for their $32M investment) 32,000 series pref A shares á $1,000 per share, convertible at $3.40. Plus five-year warrants to purchase an additional $32M worth of shares at $3.40. These pref A shares will convert into 9,411,764 of CSI common plus an additional 9,411,764 of CSI common from warrants.<br /><br />The warrants I believe I understand, if $PEGY share price >=$3.40 within 5 years, the PIPE investors can exercise the warrants and get 9,411,746 shares for $3.40 per share. <br /><br />What about the newly issued pref A:s? They get their investment worth of pref A:s which can convert 1:294 into $PEGY if $PEGY share price >= $3.40.<br /><br />CSI common = PEGY, 1:1, right? Please enlighten me if I'm misunderstanding, thanks.<br /><br />Bennoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-14607685182536181982021-12-10T17:35:50.356-06:002021-12-10T17:35:50.356-06:00I've been adding. Not sure what's with the...I've been adding. Not sure what's with the weakness in the price. It's fairly likely to be lower than the future distribution amount. A lot depends on the remaining operations. The $5m value is reasonable but could be a bit low. <br /><br />The solar business is being assigned a decent negative value at current prices. It should probably be positive. The pro forma numbers indicate somewhere between $18-41.5m in revenue for the solar business (which is made up of 3 companies merging together). If it were valued anywhere in the same realm as similar publicly traded solar companies then it's worth a lot. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-6034511865941513802021-12-09T11:51:22.160-06:002021-12-09T11:51:22.160-06:00It dropped a lot here at the latest. Did you guys ...It dropped a lot here at the latest. Did you guys add to your position?Andershttps://www.blogger.com/profile/14146294804651164195noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-75306009374513901352021-11-22T15:56:05.916-06:002021-11-22T15:56:05.916-06:00Yeah not a great result, only good thing, its prio...Yeah not a great result, only good thing, its prior to the close of the merger so CVR holders should get 100% vs 90%.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-88534056695386723032021-11-22T14:40:25.517-06:002021-11-22T14:40:25.517-06:00Building sale 30 cents per share below forecast.Building sale 30 cents per share below forecast.Anonymoushttps://www.blogger.com/profile/04936429423349643921noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-50908723145164364872021-11-14T13:07:38.057-06:002021-11-14T13:07:38.057-06:00Thanks - I think you're reading that correctly...Thanks - I think you're reading that correctly, I'll be curious if Pineapple exercises that option to raise additional capital, more from the perspective that some private investor is agreeing to the $2/share number versus just a theoretical $2/share if they do raise.<br /><br />And you're right about Pineapple, it is basically just a calling list and a bet on Kyle Udseth. They do also show some financial projections on p88 but hard to really square those with the actual results.MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-49554054316817298042021-11-12T11:56:50.539-06:002021-11-12T11:56:50.539-06:00The securities registration document is now availa...The securities registration document is now available, with more background information. Apparently, Pineapple has negative equity and zero sales, but an interesting datapoint is that debt raised by Pineapple people prior to the merger (if I understand that correctly) is valued at 2 USD per share...Lupo Lupusnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-76241512862081322682021-10-23T18:52:15.633-05:002021-10-23T18:52:15.633-05:00I think they are, yeah, but it is awkward, everyth...I think they are, yeah, but it is awkward, everything about this deal has been a bit clumsyMDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-15079971345062647442021-10-23T05:26:16.736-05:002021-10-23T05:26:16.736-05:00First table under "The following chart summar...First table under "The following chart summarizes the treatment of the different shareholders of CSI" in their latest DEFA14A-filing (https://www.sec.gov/Archives/edgar/data/22701/000089710121000768/csi211156_defa14a.htm)<br /><br />Yeah, they're probably referrig to "CSI Shareholders immediately prior to the CSI-Pineapple Merger". The phrasing is quite awkward imo. <br /><br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-26331029005656433652021-10-22T18:30:51.308-05:002021-10-22T18:30:51.308-05:00Could you help me, I couldn't find that passag...Could you help me, I couldn't find that passage, what filing?<br /><br />I think the intention is for the CVR to be for pre-merger shareholders, so the "these shareholders" are JCS shareholders and not PEGY shareholders (since there are Pineapple investors coming in with the merger)MDChttps://www.blogger.com/profile/10679835609782815537noreply@blogger.comtag:blogger.com,1999:blog-2080506270244832638.post-37091330405339185682021-10-22T17:46:56.089-05:002021-10-22T17:46:56.089-05:00Are you sure that the ex-div date did not include ...Are you sure that the ex-div date did not include the CVR's? It says under "Right to Receive Dividends and CVR relating to Pre-Merger CSI" that:<br /><br />"Dividends will consist of the $3.50 per share to be paid on October 15, 2021 to shareholders of record as of September 30, 2021 .In addition, these shareholders will receive any cash generated on the sale of CSI's Services & Support segment, real estate holdings, investments, and remaining cash - either through a cash dividend or through distributions pursuant to the CVR"<br /><br />When they're writing "these shareholders", are they referring to the shareholders of record as of september 30 (oct 18)? Anonymousnoreply@blogger.com