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10:34 pm
March 31, 2010
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DrSues02
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Jae,
Any ideas for screening for these bankruptcy plays and other special events? Or any recommending reading? I've done a bit with de-listings, going private transactions, and merger arbitrage but haven't gotten into bankruptcy ideas. RGCIQ looks like a great play.
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4:58 pm
March 31, 2010
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Jae Jun
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Yes. I've known about Regent and Citadel since last year and I have a list of radio stocks on my page. Regent and Citadel looked like profitable companies unable to extend credit.
But now I'm looking for more opportunities such as these. Last year it was all about cheap net nets but I don't think that will work this year.
In 2010 I'm after event driven activities which aren't dependent on the economy such as these unknown BK cases.
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4:28 pm
March 31, 2010
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Sid
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I too think Blue Chip is a dud at this point. I tried finding contact information for Resilient but was unsuccessful so far. Jae did you come across this opportunity from familiarity with the radio industry?
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1:31 pm
March 31, 2010
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Jae Jun
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thanks for the update. I don't believe Blue Chip will make much of a deal. If they owned shares until today where prices are at its lowest and they still haven't sold, I doubt they care much. Probably not a big part of their portfolio.
However from what I'm seeing with CTDBQ (damn I dont like looking at that stock at the moment. Keep kicking myself.. haha) volume is HUGE over the past couple of days.
If an activist other than Resilient get on board, this will be a huge rise. Even if the plan is delayed, that should see the stock price appreciate nicely.
I'm just amazed that odds like this exist at current valuations. Makes me want to find more.
Does the manager of Resilient work by himself?
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12:19 pm
March 31, 2010
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ankitgu
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Post edited 4:26 pm – March 31, 2010 by ankitgu
There should be a meeting of creditors going on right now where management is under oath and will have to answer questions. If the questions go longer than they have time for, there could be an extension.
The deadline for submitting an objection is Friday, and we haven't heard anything from Blue Chip yet. I'm a little confused on their whole involvement – they probably invested before the company went public, it went public, and they continued to hold onto shares. VC funds have 10 year life cycles and so for them to hold shares from 98 till now is odd, they usually liquidate much sooner. They look for an exit 5-7 years after making the investment, and if they invested a few years before 98, it should have been liquidated sooner. On the positive side, I don't believe they own any debt, and so if they want to get more than a $300k "gift" from this investment, they might at least support Resilient.
Ideally, Blue Chip will file something by Friday and/or someone else could come out and make a statement. Between the activist and a trustee objecting to the request to waive shareholder approval, I believe there is a decent chance something will change. I don't know exactly how much to expect, but we have a 12.8 cent downside and could very well end up in the 20-30 cent range easily. If they were willing to toss 5-6M to shareholders just to get this all pushed through, they might just as easily call it 15M and move on with their plans. (At that point, it might include new equity and not just cash)
Edit: I just wanted to add that we shuold realize Resilient's position. If you do some basic searching, we've got a gentleman who (I believe) used to run a hedge fund, then took a few years off to work against malaria, and is now stepping in with a 6.6% position. He has to put up money for the legal work himself and that is a decent risk for himself.
Ankit
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12:55 pm
March 29, 2010
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ankitgu
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Post edited 4:41 am – March 30, 2010 by ankitgu
Do you have a link to that filing?
Blue Chip has been involved in this stock for a long time, here's a 1998 filing: http://www.sec.gov/Archives/ed…..index.html
Ankit
Edit: Found it here – http://www.kccllc.net/document…..000001.pdf
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12:17 pm
March 29, 2010
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Sid
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Another investment entity has taken a large stake in the company with 2,382,241 shares. Notice was filed 3/22 by Blue Chip Venture Company Ltc on behalf of their Blue Chip Capital Fund II. The page detailing the dates on which the party acquired the stock was omitted from the filing I was able to view.
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1:54 am
March 29, 2010
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Jae Jun
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http://www.rbr.com/radio/22703.html
With Regent Communications back on track for a quick exit from Chapter 11 reorganization, one of its largest shareholders is asking the bankruptcy court to put on the brakes. Resilient Capital Management wants a new reorganization plan which will give shareholders more than the 12.8 cents per share “gift” they’re currently in line to receive.
According to a recent SEC filing, Resilient acquired all of its 2,802,193 shares of Regent – a 6.6% stake – between December 23, 2009 and March 2, 2010 for approximately $444,000, which works out to a bit over 15.8 cents per share. Obviously, it would not find 12.8 cents per share an attractive proposition.
In a filing with the US Bankruptcy Court on Tuesday, Resilient took issue with the valuation prepared by Oppenheimer & Co. for the debtor which found the current equity holders to be “out of the money.” Resilient claims that Oppenheimer was arbitrary in selecting comparable companies for the valuation purpose and that if the three companies closest in size to Regent were used, the EB ITDA multiple would have been – and Resilient argues “should have been” – higher.
Resilient’s re-do of the math claims that rather than being worth less than its outstanding senior debt, Regent actually has $36 million of equity value above and beyond the debt and restructuring costs, or 83 cents per share in value. And that’s using the Oppenheimer methodology. Resilient says its own estimate comes up with a value of $1.32 per share.
Resilient has requested that Judge Kevin Gross appoint a special committee to represent the interests of current shareholders.
According to Resilient, Regent management can’t fairly represent the interest of shareholders because CEO Bill Stakelin, CFO Tony Vasconcellos and other top managers stand to receive 8% of the reorganized company, while most of their current stock options have strike prices well out of the money.
Under the reorganization proposed in the pre-packaged plan, all of Regent’s equity, except that 8% reserved for management, would be held by its senior lenders, primarily Oaktree Capital Management and GE Capital.
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2:04 pm
March 27, 2010
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Jae Jun
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The proposed plan by Resilient puts the common at 83c! Woah. No wonder there was a huge jump today.
So now I have to see how the courts approact this new proposed plan vs the initial 12.8c which is the worst low ball offer I've seen.
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10:14 am
March 26, 2010
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Jae Jun
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Looks like the spread is tightening up even more due to Resilient Capital Management actively seeking to increase shareholder value. http://bit.ly/9YsQjO
Shame my buy orders didn't fill when it was at 10c range. Will keep monitoring this.
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9:08 pm
March 25, 2010
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Jae Jun
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RGCIQ is a bankrupt radio company and their BK plan has been approved by the court at it looks like it is set.
A simple special situation. If you own any common shares, you will get cashed out at 12.8c.
There was 15-20% spread at one point, but there wasn't enough volume for me to buy more.
The time for this to work out is still out by a few months, but another interesting point is that Resiliant Partners, who owns 6.6%, is objecting to the plan.
Pursuant to a Current Report on Form 8-K filed by the Issuer on March 1, 2010 with the Securities and Exchange Commission, the Issuer announced that on March 1, 2010 the Issuer and its subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware. Thereafter, having had an opportunity to review the Issuer’s proposed plan of reorganization, Resilient now has a present plan and intention of either objecting to such proposed plan of reorganization or potentially filing its own proposed plan of reorganization for the Issuer. Therefore, as required under this Item 4 of Schedule 13D, Resilient may now have a present plan to change the capital structure of the Issuer, replace certain members of the board of directors and management of the Issuer or otherwise propose an extraordinary transaction for the Issuer.
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