A few comments on: Assets to be sold, their valuation, and cost cutting exercises. This Bankruptcy plan is a fraud existing shareholders
Assets to be sold are essentially IP and inventory, which is just a small fraction of the USD74M assets. So the $55M would be almost all on top. It is likely there will be other bids anyway. If we look at just the margin on sales earned as in Q2 2013 they have earned USD 4.6M, which annualized might mean $18.4.M Now the potential buyer is buying basically only the IP. Based just on actual revenue they could get a nice margin which would pay back their $55M investment in less than 3 years. Without even considering the outcome and potential benefit from the other patents.
One of the basis to allow this auction process is that allegedly management has cut costs in the last several years. Quote from the DEBTORS' MOTION FOR ORDERS: (A)(I) ESTABLISHING BIDDING PROCEDURES
RELATING TO THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS' ASSETS :' 'Indeed, the Debtors have, throughout the last several years, pursued
various initiatives to restructure their business model, aggressively manage and cut operating
costs and raise necessary capital'.
This is a joke. SGA costs were $17.8M in Q2 2013, $15.2M in Q1 2013, $ 16.5M in Q4 2012. They have clearly not done that at least as far #$%$&GA costs are concerned which represent almost 3 times their revenue.
My conclusion is that:
1) $55M is clearly too little for the technology and inventory
2) (Previous) management has not done what they claimed they have done
3) they are selling the company for a fraction of the value at the expense of existing shareholders granting themselves fat bonuses
4) For all the above the bankrupt protection application and bid auction should be dismissed, management should be replaced and legal action should be started against them
$55M is too little for the technology and inventory which is why they will likely get $100 to $150M. The problem for the shareholders is that all of this money will go to the creditors (SVNT has $260+ million debt). SVNT is about to become insolvent. The bankruptcy procedure will assure continued operation (and employee and management compensation) until the winning entity takes over. If the bankrupt application is dismissed, SVNT will not be able to serve its next quarterly debt (and still retain liquidity for operation), the company will default to its creditors, and all operations will cease. Then, the creditors will auction off the company themselves. The announced bankruptcy clearly favors the management. They will continue to milk the company a little longer and will even pay themselves bonuses. In any case, the shareholders will be left with nothing.
Well either way, long term stock holders get nothing/lose the shirt off their back. So, I say let this go to the creditors! So, I agree with 'staccani '. We should form a lawsuit to get the bankrupt protection application and bid auction dismissed, management should be replaced and legal action. And this should be started now, sooner the better!
What's the best Securities Litigation Firm in the country? Name & contact info please?
kg2931 (Long n Strong SVNT(BTGC) 20K Shrs @ $4.64 Shr Avg CB ($92,800) held 16 Yrs since 2/11/1997)
You should consider also all the other assets (cash, receivables, fixed assets etc) which are not part of the deal. Roughly another $70M. So the $150M you are considering should be added to that. Only if we consider the current sales then we should have at least $200M valuation. Which added to the other assets left ooutside the sale then we have enough to pay back all the debt. The issues are at least two:
1) The $200M does not include all the IP which has not produced revenue yet, which I do not have all the elements to evaluate, but a pharma would certainly be ablet o do
2) I agree with you management is trying to protect their jobs, that is why they should go home and a suit filed against them