After the exercise of all the options and the spin off it will be time to fill the tank up again with another round of option grants. What I cannot understand is the apparent plan for many posters to continue to hold shares in the this pieces of this company post spin off.
The message here is clear: this company is run primarily to enrich management not to enhance shareholder value. This stock is not selling at a discount because the market doesn't understand the company, The discount is because the market does understand the company. It also knows that they are facing sales of about 40 million shares from option exercises before the spin-off. This company is not a hold but is a sale on any pop in price. .
What amazes me are the posters who express a desire to hold on to pieces of the spin off on a long term basis . This despite the fact that this company is being run primarily for the benefit of the management not the shareholders. ACIN will be a fee laden BDC with the prospect of little growth (selling at a discount to NAV) and below market returns. ACAS will continue to be run for the benefit of the management: a whole new round of stock options and super generous compensation plans unrelated to either the performance of the company or the stock. If the stock pops take the money and run..
One principal factor is stock options. They will be rendered virtually worthless after the spin off. Therefore, 35 million plus options will be exercised before the spin off and probably about half of the resulting shares will be dumped on the market before the spin off. The market sees this and does not want to buy before the option shares are cleared.
You are wrong. ACIN and ACAS need to trade above $10 per share. Many institutions are prohibited from buying shares trading below $5 per share and there are margin limitations on shares trading below $10 per share.
ACAS and probably ACIN will have a reverse split.
You had better look at the slide presentation. 8 million of the 41.9 million option shares do not vest until after 2015.
Apparently options will be virtually worthless following the dividend spin-off of ACIN. If the spin -off occurs before year end there will be 8 million of the 41.9 million options not vested. Assuming that ACAS does not accelerate the vesting of these options (I know this may be unrealistic) then the initial dilution from the exercise of the 33.9 million options could be about $1.20 down to $18.92. Using an assumed proceeds of $320 million from the exercises and the use of these funds to purchase 22.1 million shares back at $14.50 per share leaves a net increase in shares outstanding of 11.8 million and a dilution of $.85 down to $19.27.
If ACIN has 13.50 NAV and trades at about 11, for a 10% yield, and ACAS trades at NAV of 5.20 then total value is 16.20 for a gain of about 10%. Is this a good risk reward?
You are correct. However, this presentation brought into focus the $1.41 dilution from stock options. Many posters on this board have believed this was already reflected in the published NAV. However, if the proceeds of the exercises of options is used to buy back shares then this dilution is a little over $1. However, NAV is now viewed as about $19 not $20.,
Most importantly NOI is running only about $1.20 annualized. This will only support a marker value of about $12.00. There is considerable narrative about how this NOI will be increased .but no hard numbers. The market is craving a proforma income statement as to what the NOI might be, how it will be accomplished and a possible timetable.
NAV is about $19 after allowing for dilution from stock options. Their slide presentation shows $1.41 dilution from stock options. After using the proceeds from option exercised to repurchase shares the dilution is reduced to a little over a dollar per share.
The value of the stock will ultimately be driven by the NOI. To support $20 will require at least $2.00. of NOI. Presently NOI is at about $1.20 annualized. How that gap can be closed is the question and that is what is weighing on the stock price. .Management needs to spell that out.
Better brush up on your tax law. It will be a qualified dividend distribution by a C-Corp. The spin-off of ACGI will be a tax-free distribution.
I am not sure that ACI will not be a tax free spin. It will be a qualified dividend distribution from a C-Corp with substantial NOL's.