Main thing for RT is, it should not be running a business rather it should derive from the business whatever it had.
As such AFFY wound down everything and the only thing is left is OMONTY's royalty revenue. So it is eligible for a royalty trust structure.
On top of it as a owner of this trust, we the shareholders are entitled for its distribution of Profits or Loss (negatives).
Since AFFY has a significant loss on its books, the entire Amount will be c/f $600 mln after settling all of the dues. That is one of the reason they are settling all of the liabilities and moving forward and Brenners appointment also makes sense.
Those who purchased 45 MLN shares last month btw 1:80-1.95 knew it all along, what is going to happen here. For those big hedge funds this is a huge benefit, these can w/o entire tax loss with the AFFY's NOL when they receive their tax statements.
Sentiment: Strong Buy
ONE MAJOR CLARIFICATION---NOL's have already been expensed for accounting purposes and sit on the books ONLY as a tax asset carryforward. They will NOT be deducted from any distribution under a Royalty Trust, but rather make the first $600 milllion of royalties effectively "tax exempt"...Just as if you had tax loss carryforwards in your own personal account of $50k...Your next $50k of gains would be tax free. So royalties under such an arrangement would be distributed dollar for dollar (less any corporate expenses which should be minimal...purely an administrative company at that point) LESS any residual debt that may not have been completely cured prior to this type of arrangement...NOTE---In the last renegotiation they did provide a "conditional" payment of $1 million pending the resumption of Omontys in the marketplace (a little more complicated than that, but that was the essence), which would come out of royalties before royalty owners get their distributions....Anyone familiar with the independent oil and gas business should know EXACTLY how this works where working interest owners come first before royalty distributions.
if you have a tax loss caryover in a individuals acct is limited to 3000 per year so your comparison its not completely correct..basically the trust is structed to create tax free income to its investors as a result of the expenses generated by the corporation and passed onto the trust, which in turn allows the trust to shelter income it generates and pass on the tree income to its investors..this whole process is even more benfitcal to a corporate buyer of the trust..for ex., if amgen where to buy this structure it could almost recoup all its cost associated with buying this shell easily within the 1st couple of years of purchase if not sooner...
Sentiment: Strong Buy
Max: their is alot of options out there, so if hypothetically, and for the purpose of clarity; if someone has 50,000 $2.00 Oct calls, and tomorrow it were to be announced that Affy is officially a Royalty Trust, and the pps moved up to $2.05, I think you are saying that the Options (or any profiting shares) could be sold out of the money tax free from any profit?
Or, will the Options have converted to some other form of "unit" along with the conversion from a Public Stock Company to a Royalty Trust?
Finally, outside of the PPS moving up on news of the re-introduction of "O", how do Option holders and or Shareholders profit on royalties if royalties wont be recongnized unti potentially 2014? Appreciate the clarification.
the tax loss could be better used by a buyer as a means to reduce there over all cost..which makes more sense...as far as 45 million shares being purchased..thats more then the float..your implying that the total float turned over which it didnt..which brings up a very important point there are more shares on the books then which actuially exist....and if there is a buyout this will be exposed and cause a huge spike up beyond the buyout px in addition to short scrambling to balance out everything...amgen, takeda and affy insiders are will aware of this..another reason why the buyouy makes sense..everyone makes out BIG TIME right away...insiders on both sides while the dirt is buried along with shorts who had their chance to walk away with a profit..
Sentiment: Strong Buy
Its a Positive News if that happens ... Do u think with this News the stock price will Rally... and if what are your Guess Estimate .... and How about the yearly Profit Sharing Range?? If O is back ....
It will rally big but how big is anyone's guess. Not sure how being on the otc affects a rally. I think any institutions holding(if they still are) will not sell. If that is the case not much left in retail hands and as a long term this would be too attractive not to buy. Price?????.