Its tough for such a small company to raise capital.
All in all, its a reasonably fair deal. At one point I was considered they would have to price it under $2.
And heck, they probably could have sold the 2.83 million at $2.00.
So the deal they did strikes a good balance.
They can raise more in a year or so if the market price improves and they put the capital to good use.
They can immediately pay down the high cost debt to friends & relatives of board members.
In hindsight, selling out at $4 would have been the right move. But who knew in advance where the top would be ?
LOAN will need to renew their deal with Sterling by Dec. but that shouldn't be a problem and I expect with the new capital they will even raise the limit.
They project net proceeds of $4.3 million which means it cost us 14% to raise the capital which means the company netted $2.451 per share.
Could end up being a little more if they exercise their overallotment shares.
The current $2.53 is an 11.06% yield. Probably worth owning. I wouldn't be surprised to see it go to a 9% yield
which is about $3.11 within 6 months.
Downside risk seems very small. Its hard to imagine the shares going to $2 again. unless they announce a first time ever write down or something.
Jim Wade, who possesses 35 years of retail expertise, has been appointed as an independent member of the Company's Board of Directors, effective immediately. He will serve on the Company's Audit Committee.
Wade currently serves on the Board of Directors and Finance Committee for Advance Auto Parts, Inc., the largest automotive aftermarket parts distributor in North America. He first joined Advance Auto Parts in 1994 as Treasurer, and retired as President in 2011 with responsibilities including store operations and both the DIY and Commercial businesses. Since 1994, Advance Auto Parts has expanded from approximately 300 stores to over 5,200 stores and increased revenue to $9.3 billion.
Wade also currently serves on the Board of Directors and Audit Committee of Lumber Liquidators Holdings, Inc., the largest specialty retailer of hardwood flooring in North America, in addition to providing leadership on numerous non-profit, industry, and educational Boards.
"We welcome Jim to the Tuesday Morning Board of Directors, where his retail, logistics and operational experience will be highly complementary to the Board's ongoing work," said Steven R. Becker, Chairman of the Board. "In particular, his integral role establishing Advance Auto Parts as a leading customer service-focused organization carries important lessons for Tuesday Morning, and we look forward to benefiting from his expertise."
Earlier in his career, Wade held senior management positions with S.H. Heironimus, Inc., a regional department store company, and American Motor Inns, Inc., a publicly-traded hotel franchisee, and served as an accountant at KPMG.
So anyone who got cashed out can get back in if they want.
8k on 7/24...
On May 8, 2014, Steel Excel Inc. (the “Company”) increased its holdings of the common stock of API Technologies Corp. (“API”) to 11,377,192 shares through the acquisition of 1,666,666 shares on the open market. Upon acquiring such shares the Company held approximately 20.5% of the total outstanding common stock of API with a fair value of approximately $26.6 million.
Where did you get 2.5 million ?
I don't recall seeing that figure anywhere.
What happened is the underwriter manipulated & shorted as much stock as possible and then made a deal where they sell the 1.754 million.
The underwriter is never going to lose.
And the company is probably only going to net about $2.50 per share after all expenses.
The current price is a modest discount likely reflecting the underwriting discount. In other words, if the discount is 8%, the underwriter pays $2.622 per share.
So wholesale is $2.62 and retail is $2.85. No free lunch.
In hindsight, I should have sold out at $4.
Why didn't someone tell me that was the top ?
A follow-on offering (often but incorrectly called secondary offering) is an issuance of stock subsequent to the company's initial public offering. A follow-on offering can be either of two types (or a mixture of both): dilutive and non-dilutive. A secondary offering is an offering of securities by a shareholder of the company (as opposed to the company itself, which is a primary offering). A follow on offering is preceded by release of prospectus similar to IPO: a Follow-on Public Offer (FPO).
It was originally $10 million or 2.83 million at $3.53.
Maybe they knew they would never sell that many but just went larger trying to sell as much as they could ?
Its a fair offering in that its not dilutive to current holders based on book value anyway.
Not really. Its less than they were looking to sell. But $2.85 is a reasonably fair price I guess.
But its not trading.
pricing of the offering ?
I haven't been here for 10 years. I first bought 1/28/13 at $44.40.
I missed reinvesting the first dividend but have since then. And I bought 125% more at $40.51.
This is my first utility. Im inclined go reinvest dividends long term unless the stock were to rally to $55 or something. Then I might stop the reinvestment.
Im not inclined to add more beyond the DRIP except on significant weakness.
I would probably like a larger position here but not sure on the timing of buying more.
Oh and Im doing the dividend reinvestment via my broker which is different than doing it via SO, I believe.
You cant really have store managers contacting buyers.
if every manager spent 5 minutes a week on the phone with a buyer, that would be 69 hours.
So there has to be some kind of way to divide the stores into 4-8 different segments based on area income or past sales rather than every store getting the same stuff no matter if its in a poorer or a richer area.
They don't need to sell below book value is my point. I would hope they don't price the offering below $2.50 at an absolute minimum. But for it to sell at $2.50, the market price would have to be higher.
Ideally, they sell it at $3.50+.
I am not sure what kind of yield a low priced REIT will command because I don't have a lot of experience with REITS, particularly under $5.
Part of me thinks it will command a premium for being low priced but part of me thinks the market will assume its junk because of its low price and price it at a discount.
I don't know.
Tresfind probably knows but he isn't saying.