Significant Corporate Actions for ALJJ, CVTR, ERS
|Feb 14, 2013|
Unlisted companies can be just as dynamic as their larger, listed peers. Three of the companies I have profiled recently announced major corporate actions that deserve attention.
ALJ Regional Holdings - ALJJ
ALJ Regional Holdings successfully completed the sale of its operating subsidiary, KES Acquisition Company to Optima Specialty Steel for $112.5 million in cash. ALJ completed its previously announced tender offer on February 8, accepting 30 million shares at 84 cents. 90.8% of shares tendered were accepted for purchase. Following the tender offer, ALJ Regional holdings has 29.65 million diluted shares outstanding, with 93.8 cents per share of cash and receivables, plus tax assets.
I tendered all of my shares in the offer, but I intend to keep my remaining shares in order to benefit if Mr. Ravich can repeat his success. I will be moving ALJ Regional Holdings to the Inactive Ideas section of the Idea Tracker page. Total return since my writeup on August 10, 2012 was approximately 91%, assuming remaining shares are sold at today's price of 75 cents.
Care Investment Trust - CVTR
On December 31, 2012, Care Investment Trust announced plans to merge with its parent company, Tiptree Financial Partners, LP, to form a new company, Tiptree Financial Inc. The newly-formed company will attempt to list on a national exchange and will have a pro forma book value of $380 million.
On February 8, Care Investment Trust announced a joint venture with Calamar Enterprises to acquire two senior living complexes in Western New York state for a contribution of $18.3 million. The company expects to generate a greater than 12% cash return in the first year of operations, or at least 21.5 cents per share.
It is good to see the company putting some of its excess cash to work, assuming the deal goes through. This deal, if successful, will result in better coverage for the company's dividend and perhaps greater investor conference. The merger with Care's parent company is difficult to parse. On one hand, being a part of a larger company may provide greater liquidity and better investment opportunities for Care, on the other hand it is possible that Care Investment Trust shareholders aren't getting the best deal on the exchange. After all, Care Investment Trust is 90.8%-owned by Tiptree and Tiptree would not be doing this if it were not getting a good deal.
The situation is developing and for now, Care Investment Trust will remain an active idea.
Empire Resources - ERSO/ERS
On February 4, Empire Resources successfully uplisted its stock to the New York Stock Exchange, changing its ticker symbol to "ERS." Since announcing the uplisting on January 31, the stock has been on a tear. Empire Resources now trades at 15x trailing earnings and 1.3x book value. The stock may have more room to run, but at $5.00 it is no longer the screaming bargain it was when I wrote about it on March 22, 2012. Total return from then to now was 77.69%. I will be moving Empire Resources to the Inactive Ideas section.
Disclosure: I own shares of ALJ Regional Holdings