As of 3/31, book value was reported to be $45.4 million, and Yahoo Finance reports book value per share of $1.96. But that $45.4mm figure includes $38mm of preferreds (A and C), no? So if you net out the preferred equity, it seems to me that the book value attributable to common stock is just $7.4 million, or 32 cents per share, and the current price/book is close to 3x. Please correct me if I'm wrong, thanks!
Notice who is filing Form 4s. The Argentinians! The stock is not going to stay below $1.00 so it won't get de-listed. They didn't put in $millions to own a de-listed stock. The big loan coming due at the end of the year will be re-financed at a better rate and will free up a lot of collateral. Room rates are going up which is great for the properties that SPPR owns but makes buying new properties more expensive.
1. Mangemnent is good. They recognize the low star motels are untenable and put together a plan to go upscale to a defendable niche.
2. All the motels are written down to market value or lower. Sales will usually result in small gains.
3. Mgmt is aggressively selling the bottom market motels.
1. There is no dividend.
2. There are no earnings.
3. This stock is currently headed off the NASDAK. This will lower the price even further.
4. I see limited upside for small investors. The preferred today controls 30 million common shares but all other holders only control 22 million. If the stock goes off NASDAK a large portion of the public shares can be bought cheap. The preferred shares can sit forever collecting the dividend or take absolute control without buying out the public shares.
3. The $30 million brought in, which was only $28.6M, by the preferred stock sale retired $20M debt and put $8.6M cash on the B/S. The preferred costs 6.25%, average debt costs 5.5%. A breakeven except for the cost of the cash on hand. And mgmt avoided possible bankruptcy by panicked bank loans. Mgmt also improved operators.
Good call noticing the book vlue was overstated. I took your analysis one step further using the 6/30/12 B/S. Equity of $46,989 less $37,962 additional value of preferred = $9,027 common equity. Add back $16,035 derivative value of the $1 prefererred option conversion and the $1.20 option to buy additional common = $22,072. Divide by outstanding shares 23,075 = $.96 book value per common share. If the preferred is converted then $52,072 equity divided by 53,075 shares $.98 book value per common share.
I did some research on book value. In the merger proxy in December using September 2011 numbers the book value was $1.59, the pro-forma value after conversion of convertible preferred would have been $1.25 and after the execution of options the book value would have been $1.21 per share. Since then SPPR has taken $12 million in impairment charges. On a fully diluted basis (84 million shares) that reduces the book value by $.14/share to $1.07 per share. I ran this past an accountant and got a thumbs up. Now what that makes the stock worth who knows?