Potentially interesting bits from 10k - patronage shares - hidden source of $2.9M? If they get these redeemed, that looks like $4.41M in cash? See below
Note 9 - Investments - page 61
The investment in CoBank stock is carried at historical cost due to no readily determinable fair value for those instruments being available. Management believes there has been no other than temporary impairment in such investment. This investment consists of patronage certificates that represent ownership in the financial institution where the Company has, and in the past had, debt. These certificates yield dividends on an annual basis, and the investment is redeemed ratably subsequent to the repayment of the debt.
And then on page 36 under Liquidity and Capital Resources
We also have received patronage shares, primarily from one of our lenders, over a period of years for which there is a limited market to determine value until the shares are redeemed by the issuing institution. Historically, these shares have been redeemed at a value similar to their issued value. Due to the uncertainty of this future value, these shares are carried at $1.5 million, or approximately 34% of their issued value.
"Historically, these shares have been redeemed at a value similar to their issued value. Due to the uncertainty of this future value, these shares are carried at $1.5 million, or approximately 34% of their issued value."
I've searched through earlier 10ks and it looks like they received these Cobank shares when they acquired MMet. Another set of shares they got in the same deal (Rural Telephone Bank) were redeemed in 2006.
The language they use suggests that these could (should?) be redeemed once the debt to Cobank is paid off. I am not sure if the restructuring qualifies since Cobank is a participant in the restructuring and will be involved after emerging.
It also looks like the dividends from these shares were plugged into the pro-forma income statement and projections that came with the reorg plan. They lumped them in with "Other Non-Operating Expense" - looks like something around 300k per year. (see Note E in the notes to the projected income statement)
So I am not sure if we can count these as $4.4M of cash, but I'm sure they could get something more than 1.5M for them. This is a source of value and is material given the numbers involved...
FWIW, the language about these being carried at 34% of their issued value is new and doesnt appear in any other 10k.
IMO, this shows that management is being conservative...