Google Finance
Filing
July, 9, 2016
Current price $2.50
1. Business
(1) This is cash shell company with no business activity. Cash $33.5m. Shares: 13.1m. Market cap: $33m.
(2) Currently running rate is about $0.5m/quarter. Two full time employees + some part time I guess.
(3) The company bought back over 5m shares at $2.65/share. Also has ongoing share buy back at 10%/year.
(4) Lawsuit with GM
Currently there is $25m lawsuit against GM about a contract termination at 2010. The company lost millions due to factory shutdown. The lawsuit has last for several years and it is likely to have a result in second half of 2016.
Its former CEO Michael Blair on the lawsuit:
“The last contract my company had with GM is an example. We contracted to sub-assemble cockpits for the Chevrolet Camaro being produced in Oshawa and invested millions of dollars in equipment and training. As soon as the investments were made and production was about to begin, GM demanded a 50% reduction in the price for our sub-assembly work or they would move the business to another supplier. We refused, they followed through on the threat and we suffered millions of dollars in costs to close the facility. The merits of that decision by GM will be contested in a lawsuit between my former company and GM, which is still before the courts and I won't comment further. The point is, regardless of the legalities, it is poor form to contract with a party, let them get pregnant with major capital outlays and then demand a 50% price reduction. Anyone who has ever supplied a car company knows that no supplier can absorb a 50% price reduction on any contract.”
2. Thoughts
(1) If the company win the lawsuit, it could translate to around above $1.80/share value. Based on the Michael Blair's writing I believe the outcome is more likely positive.
(2) The management seems quite share holder friendly with share buy backs and dividends. Although they stopped dividend payment since 2016.
3. Risk
(1) Lost in the lawsuit, in this case, its cash will drop under the current market cap. I am prepared for a 20% decline.
(2)The lawsuit is set to trial at the second half of 2016. The result could be delayed.
4.Links
Automodular – A Liquidation Play
Michael Blair on GM
http://stock-market-insights.ga/automodular-a-coiled-spring/
Feb. 3, 2018
Currently been halted, Previous Price: $2.4. Shares: 12,976,227
(1) Cash 32.5m. Cash/Share: $2.5.
(2) The lawsuit trial is set to begin at Feb. 2018.
(3) The company is set to be taken over by HLS Therapeutics. For each AM.H shares, exchange for 0.165834 shares of HLS. Totally will be 2,151,900 shares of HLS shares. Also, it will set aside an escrow fund around $7m which is the total cash less $25m for the GM lawsuit. After the lawsuit ends, 95% of proceeds from the lawsuit and left over in the escrow fund will be distributed to original AM.H's shareholder. The redemption might be paid in several times and as a dividend of preferred shares.
(4) HLS is also seeking a private placement of no less than USD$9.25/share. If using 1.25 for USD to CAD. It equals 9.25*0.165834*1.25=CAD$1.92. Totally that equals $25m of market cap. Which means HLS is indeed just getting into the company as a private placement. It is quite a good deal for HLS because it also is able to go public for free.
Feb. 20, 2019
Still been halted.
(1) The company settled the litigation with GM will pay AM for $7m. It is much lower than the original claimed $20m+$5m amount. Since it was solved before the reverse merger with HLS. The two companies will make an amendment to the take-over agreement.
Feb. 26, 2019
Still been halted.
(1) The company will distribute $6.3m which is all the net proceeds from GM settlement to preferred shareholder as a redemption. The redemption price is $0.65/share and will redeem 9,689,289 shares. The left-over shares should be 12,976,227-9,689,289=3,286,938. Based on $7m balance on escrow fund, it is over $2/share.
However, "the escrow account (governed by the Claims Administration and Escrow Agreement) prior to closing of the Arrangement will be used principally to fund certain administrative costs in connection with post-closing matters, to pay taxes payable by AMD in connection with receipt of the settlement proceeds from the GM Claim, and to cover other legacy claims, if any, that arise on or before December 23, 2020. Following that date, the outstanding Resulting Issuer PreferredShares will be redeemed in return for the net funds in the escrow account as at that date, if any."
Assuming there is $1m additional cost, then at the end, it still should get around $1.50/share distritution.
Michael Blair on GM
http://stock-market-insights.ga/automodular-a-coiled-spring/
Feb. 3, 2018
Currently been halted, Previous Price: $2.4. Shares: 12,976,227
(1) Cash 32.5m. Cash/Share: $2.5.
(2) The lawsuit trial is set to begin at Feb. 2018.
(3) The company is set to be taken over by HLS Therapeutics. For each AM.H shares, exchange for 0.165834 shares of HLS. Totally will be 2,151,900 shares of HLS shares. Also, it will set aside an escrow fund around $7m which is the total cash less $25m for the GM lawsuit. After the lawsuit ends, 95% of proceeds from the lawsuit and left over in the escrow fund will be distributed to original AM.H's shareholder. The redemption might be paid in several times and as a dividend of preferred shares.
(4) HLS is also seeking a private placement of no less than USD$9.25/share. If using 1.25 for USD to CAD. It equals 9.25*0.165834*1.25=CAD$1.92. Totally that equals $25m of market cap. Which means HLS is indeed just getting into the company as a private placement. It is quite a good deal for HLS because it also is able to go public for free.
Feb. 20, 2019
Still been halted.
(1) The company settled the litigation with GM will pay AM for $7m. It is much lower than the original claimed $20m+$5m amount. Since it was solved before the reverse merger with HLS. The two companies will make an amendment to the take-over agreement.
Feb. 26, 2019
Still been halted.
(1) The company will distribute $6.3m which is all the net proceeds from GM settlement to preferred shareholder as a redemption. The redemption price is $0.65/share and will redeem 9,689,289 shares. The left-over shares should be 12,976,227-9,689,289=3,286,938. Based on $7m balance on escrow fund, it is over $2/share.
However, "the escrow account (governed by the Claims Administration and Escrow Agreement) prior to closing of the Arrangement will be used principally to fund certain administrative costs in connection with post-closing matters, to pay taxes payable by AMD in connection with receipt of the settlement proceeds from the GM Claim, and to cover other legacy claims, if any, that arise on or before December 23, 2020. Following that date, the outstanding Resulting Issuer PreferredShares will be redeemed in return for the net funds in the escrow account as at that date, if any."
Assuming there is $1m additional cost, then at the end, it still should get around $1.50/share distritution.
