Shares are trading at a 25% discount to what the share exchange would be today if c) doesn't happen. The risk that REGI shares go down should be reflected in both REGI shares themselves and SYNM shares in equal measure, so the 25% discount is more of a reflection of risk around the deal itself (both the deal closing and SYNM not botching the cash payouts).
The downside here at this point is that a) REGI shares go down (main reason: tax credit expiration with no renewal in sight), b) REGI shares go up too much (above $12.90), and c) SYNM botches the use of cash to dispose of obligations. With a), you can make up the downside on the share exchange as long as REGI goes back up, so it's less risk. With b) and c), the exchange ratio on the shares changes, so you lose something from the start.
Upside is entirely tied to REGI shares going up long-term (without going up too much in the short-term, i.e. going above $12.90). If you believe in tax credit renewal and that they can get the DF plant running, there may be something there. Or not.
If the deal closed today, the deal would be worth $4.27 for SYNM's shares, so trading at a distinct discount right now. Lots of moving parts for arbitrage players.
I'd expect it to be fairly uneventful, as well, though, given sentiment around the stock, a statement that the strategic process is still ongoing would almost be a positive for the stock at this point.
Problem is, most of the board/executive holdings are options-based. So, nothing ventured, nothing lost for most of them. Different risk/reward equation.
I think you're on the wrong board here. This company only elects pure-bred Americans to its board. Besides, what Greek in their right mind wants to go to Tulsa for a board meeting?
Deal of this size probably gets Piper between 1-2% of the transaction size. So, they are incented to get the best price they can and sell as much of the company as they can.
Could be perfect timing if the process has died and SYNM/TSN want to start the plant back up. Otherwise ... bad timing, given that we are producing no fuel.
By the way ... the PR/IR firm Joele Frank was a package deal with Piper, with the idea that they would help with communication to investors during the process. I don't think they're earning their fees here.
The close on 7/16 (the day before the strategic process was announced) was $7.38. You can take that however you like ... either as a floor on a potential acquisition price, or as evidence of how horribly SYNM has botched communication around the process since then.
I think they would probably post any presentation they give, but I doubt they would provide a word-for-word transcript of the Q&A. I'm guessing they'll have to file an 8k if they give comments on current status of the process and/or the plant ... which they'll have to, in some shape or form (even if it's "the process continues on," which is an update of interest in and of itself).
Anyone going to get on? I may not be able to, given the timing, but it'd probably be good to have people on asking some tougher questions. I'm guessing we won't get a Seeking Alpha transcript of this one ...
"The discussions of strategic alternatives began above $7 and any deal should have that as the floor of discussions."
Always an interesting point.
Looks like we shouldn't expect the tax credit to get renewed before year-end, so that won't be a catalyst.
** Hello Budget Deal, Goodbye Tax Extenders (for Now)
Guesses, bets and hunches aren’t popular among finance chiefs. But that is exactly what they face, tax-wise, for the foreseeable future.
The budget agreement reached late Tuesday will avert a government shutdown next month, if passed by Congress in the coming days, but there is little hope that anything will be done to overhaul the tax code this year, let alone to renew any of the 55 federal tax credits that will expire at year-end.
Whether these so-called tax extenders are renewed “is all still being worked out and there is no final decision,” according to a person close to the Senate Finance Committee who wasn’t authorized to discuss the matter on its behalf. “However, with only eight days before the Senate is scheduled to break for the year, time is not on our side.”
The committee, along with its counterpart in the House of Representatives, the Ways and Means Committee, has been pushing for comprehensive tax overhaul. That work, however, has been largely on standby as Congress has waged a rancorous, monthslong battle to come up with a budget both sides can stomach.
“I think resolution of this is unlikely to occur in the near future,” said Hank Gutman director of accounting firm KPMG LLP’s Tax Governance Institute and a former chief of staff for Congress’s Joint Committee on Taxation. There is some reluctance to deal with the extenders alone, he said, especially given the need to find the money to pay for them before Congress will pass them.
Among the more important extenders for businesses is the research and development tax credit, which gives breaks to U.S. companies that invest in domestic R&D. Without certainty that these credits, and others, will be extended, CFOs can’t accurately predict their 2014 tax bills.
“Of course, [planning] is extraordinarily difficult,”