Take a look at Homeland Security’s 14C filing last week on SEC’s website. Looks like they were facing foreclosure and Perma-Fix may have gotten a much better deal than originally contemplated. The purchase price includes a working capital guarantee and potential price adjustment which could amount to about $10M combined, and could make the real net purchase price closer to about $14.5 million. Layer onto to that an indemnification on one of the contracts for $1.5M, so if the contract doesn’t happen, the price falls to about $13M. Also, looks like they are not counting any receivables over 120 days, but if they can collect those receivables, it would be ‘found money’ not accounted for in the transaction price. If this turns out to be the case, given SEC’s strong historical cash flow, kudos to Dr. Lou on negotiating an amazing price!
Slow down, cowboy. If you read the HOMS Information Statement dated 8/8/11 carefully, you will see that the remaining businesses retained by HOMS are money losers. The surviving entity has a very low probability of surviving. Consequently, all of the guarantees, indemnifications, and price adjustments likely will be recoverable from an insolvent company. More likely than not, they are worthless, or, at least worth less than face value. That's why HOMS stock trades for $0.01.
the price adjustments are factored in at closing. perma-fix gets rights to all the receivables even those over 120 days. The $1.5M is held in escrow. Doesn't matter if HOMS becomes insolvent - wont affect the purchase price.
For the HOMS shareholders, it's a sad story. The stock was trading at 2 cents prior to the buyout announcement. It surged up to 8 cents in one day and now it's a single penny and headed for oblivion.
The cynic in me says that HOMS insiders and friends structured the deal to look as lucrative as possible for their shareholders. While the suckers bought, the knowledgeable sold.
PESI protected itself from these machinations with a carefully constructed contract and it does appear the real price will be somewhere between $19 and $12 million. Maybe lower if they can collect those receivables beyond 120 days.