Also liked the comment about increasing market share, although it feels like they are increasing their market share of marketable securities, primarily. That's ok.
8K filed. $3.1 million cash plus lease assumption. Plus the PR previously disclosed a "multi-million dollar" expansion of the facilities. So that ain't going to leave much, if anything, for future injection wells. I'm ok w/that. I don't want to worry about the outcome of referendum votes on fracking every six months. They have the two injection wells permitted, operating, and presumably grandfathered. It took nearly forever to get them on stream, and I am sure management had more than enough " fun " w/that process. Hopefully they add a bit of free cash flow annually. Eventually, maybe you sell and turnkey them over to someone else at a profit. So you have a 144 room hotel, but the story will be more about how much each visitor spends on golf, tennis, spa, dining, swimming etc. Or alternatively, how much of that gets added to the room charge in a package. If the property ends up being a truly attractive, one-of-a-kind vacation complex (say like South Seas Plantation on Captiva Island), more than one or two PE entities will be following it. There's just something about real estate, new or well-maintined real estate. It remains to be seen if it becomes a hot, must-go-to destination. I happen to love the Midwest. Not everyone does. Maybe as a shareholder I can even get a free night, or at least a golf pass for the day next time I pass through Ohio.
They have been dancing around the debt issue. They have gotten waivers, reworked the covenant formulas, gotten special dispensation to access funds and sell some assets. The forest for the trees here is that we are talking about maybe $15 million worth of debt overhanging a company w/replacement value well into the hundreds of millions. Not that $15 million of debt couldn't bring a company down, it could. But we are not talking about some companies in this sector that have had much bigger issues w/hundreds and hundreds of millions dollars of debt on the balance sheet. We are talking about $15 million. That is not an unsolvable problem, and could be eliminated or re-worked any number of ways. It might involve a little dilution, it might not even be necessary if the contract flow resumes. But basically the company should stop "monkeying around w/it", nibbling at the edges, and take the issue out of the market. I'm sure there is at least one PE guy out there w/$15 million in his pocket as chump change that would listen to PESI's story.
I had thought the same thing. If it is a material event and the acquisition has been completed, an 8K has to be filed. He can have as long as four business days to file the 8K, but in some cases if it is filed just to comply w/ Reg FD disclosure, I believe it may have to be filed earlier. How much substantive information is required to be included I am not sure. I would think the purchase consideration at a minimum, but maybe not the projected additional cost to expand and upgrade and integrate the hotel w/current operations. Bet on as late as possible a disclosure w/as little information as possible---but I think we will get something soon that includes the purchase price. Then we need some smarty pants hotel guy to tell us if the price paid per room was a deal, and how much annual revenue per room is a fair expectation.
Well, it's a fairly bold move and if the public market doesn't buy into the idea w/higher stock valuation, there's a decent chance he just takes the company private IMO. I think in the $3s range, with him owning over 20% of the company and about half the company's value already there in cash, combined w/ a small number of shares outstanding, it makes sense. I really think Klingle may not care at all what the public market thinks at this point. He knows what he has and probably has his own growth (and ultimately, exit) strategy. Since he's debt-free, he is also free to pursue his own agenda pretty much unencumbered.
If it were me, my next step would be to try to re-fi the current portion of long term debt or get it re-classified as long term.
Re: Isotope funding, they have possibly missed the window for this year. All of Europe goes on vacation the entire month of August, and given the pullback in worldwide markets, especially Europe the last six trading sessions--I just don't see capital being raised there any time soon. Europe is at serious risk for a deflationary event as the ECB diddles. Good news is the co. has been raising cash by getting a release on most of the insurance proceeds and a small asset sale. Bad news is if you look at the negative working capital--they needed to raise cash. I'm not sure they have reached cash break-even on an operating basis, but selling a money losing operation and releasing personnel gets them a bit closer. I see them as still needing a little more cash and a possible further re-work of terms w/PNC although that was not mentioned in the 8K related to the asset sale and is just my supposition. It's probably workable as they are close to pulling themselves out, but they are still "dancing on the head of a pin, at least near term. They are just going to have to grind it out and hope for more contract flow. Insiders own a lot of stock, so they should be well motivated.
Actually, the sixth consecutive daily decline for this one. It is totally tracking Euro markets. I almost bit today, but figured I didn't want risk a buy ahead of the weekend (like every other fraidy-cat investor out there) and really want it a little cheaper. That's probably being very penny wise and pound foolish. If it opens at $25+ on Monday it will serve me right. Euro markets are really freaked by the Ukraine crisis, but it only makes the area Awilco operates in (U.K. sector of the N. Sea) seem that much more secure and attractive for operators. The selling is all knee-jerk, or more likely an institutional holder simply wanting or being forced to be more liquid w/cash. You sell what you can. The ECB is truly risking pernicious deflation by having not put forth an aggressive QE package. No matter, Awilco has long term contracts. Comfortable for 3 years, hoping for 10-12 years of nice payouts.
The move tells you a few things. 1. I bet Klingle has been eyeing this property for a long time. It is a near perfect fit in terms of its use and location. He has been on record in the financial filings indicating the company was open to future transactions (and effecting consolidation) in this area. 2. He is willing to commit cash that has been sitting on the Balance Sheet for some time earning nothing to now attempt to generate a return. 3. He wasn't going to bet all the cash on injection wells. It appears those will have to fund or bootstrap themselves. He might even utilize cash flow from those operations to expand the resort/golf/tennis/spa side of the company business unless the injection well segment provides a superior return (my supposition). The idea of developing an overarching all-inclusive resort w/full access has much more appeal than running golf/tennis/swimming etc. from disparate discrete locations. It changes the tone of business dramatically. The question is cost and how much demand will exist and how you price it for users. There are other entities that have great depth of experience in such matters. Curious how long Mr. Klingle's reach might be to those resources.
Purchase price? Plus the Cost to Renovate and expand? Go big or go home on the resort side of the business is actually pretty smart IMO, but of course it depends how much it costs you (or shareholders in this case). Business clients and vacationers want "state of the art" and top quality when it comes to that kind of stuff---not some half-way pitch and putt sort of operation. Also lends itself to the watchful eyes of Private Equity (e.g. guys like Blackstone) who like to acquire trophy resort properties.
I realize FARO (somewhat inexplicably) has gross margins some 10% higher than PRCP, but PRCP is selling down almost $7 from its 52-week high and is much closer to it 52-low than its 52-week high. Plus FARO could catch Helix right before it reaches an inflection point, and it is a product line they could really use. And the synergies would have to be tremendous. FARO could eliminate the CEO, CFO, COO, accounting functions, almost all the marketing---maybe only really needing to keep the R&D folks. FARO already has the customer base to sell into and instant diversification possibility across a broad array of products and customers it would otherwise take PRCP years to build out. I have little doubt FARO could quite easily bring PRCP margins up to FARO's level, or even higher on redundancy elimination alone. Plus PRCP is just the right size for them to swallow, along w/ no debt and $34 million of cash. What am I missing?
Reflected in a significant stock pop. Now they should use their stock as currency to look: "you know where"........................... Hey flying trader, you follow that one, what do you think? Think FARO should add some in-line 3D laser measurement to fill out their product offerings? I think it is a no-brainer, BWDIK?
Some of these small caps just being given away in the last month. Part of the ETF purge of small cap stocks. More than a few can be had w/debt free Balance Sheets and about half their market cap. in cash.
The COO sold half his stock in March and the former CEO and CFO retired near simultaneously last year and sold chunks of their stock for a reason. Helix is a good story. It's just that it is still a ways off from being impactful. If Happy Days were just around the corner, the former CEO and CFO would have probably waited and the COO would not have dumped half his stake in the company. I like it at the new CEO's stock option exercise price of $9.91 per share or a bit lower.
Well, the CEO has been at this a while now trying to turn this company. He owns a bunch of illiquid stock, as does the good doctor. Sometimes, as age 70 looms ever closer, legacy concerns, exit concerns, and what one wants to do w/the rest of their lives (especially when they get no respect from the stock market or public valuation) drives a new calculus. I bet he lets the injection well thing play out a year or two, but after that.............
Looks like an institution has decided to purge its position in the company. Unfortunately, they are not being very smart or price sensitive about how they are doing it. And they may be doing just ahead of a return to positive cash flow in 2Q. Who sells a virtually debt-free company w/close to $2 per share in cash and trading at 0.2 times revenues at this price? IMO it's both a stupid and messy exit of an illiquid position, but it's probably only a rounding error in the PM's overall portfolio and he could probably care less. He just wants out. Hey, I'm happy to take advantage of someone else's carelessness. That's how you make money in the market.