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  • Myrexis, Inc. (MYRX) Cancels Plan Of Dissolution (Update)

    The Myrexis Board of Directors cancelled the special meeting scheduled for January 23, 2013, at which shareholders were to vote on a Plan of Liquidation and Dissolution.

    The Board has decided to cancel the Plan of Dissolution, appoint a new President and CEO, and pay a special cash distribution of $2.86 per share with a record date of Monday, February 4, 2013.

    This is a significant change in plans for Myrexis. The Board believes the new President can create more value for shareholders by acquiring revenue or income producing assets through a reverse merger or acquisition. The company also retains a brand, infrastructure, and remaining intellectual property that includes several license agreements.

    I had anticipated an initial liquidating distribution on the high end of the DEF 14A estimate of between $2.67 and $2.83. The $2.86 special distribution is great. Under the new arrangement I will receive my entire $2.79 investment back, a nice annualized return, and I will still own the common with potential for unlimited upside for free! The current trading price of $2.91 implies a market value of MYRX after the distribution of $.05 per share.

    What started as a special situation investment, with upside limited to liquidation value, has turned into a longer term holding that has the potential to generate a significant asymmetric return profile.

    Disclosure: I am long OTCPK:MYRX.

    Tags: MYRX, liquidation
    Jan 23 2:04 PM | Link | 2 Comments
  • Helix Biomedix, Inc. (HXBM) 299 Trade Update

    On December 28, 2012 Helix Biomedix, Inc. held a Special Meeting of Stockholders, at which a proposal to amend the Company's Certificate of Incorporation to effect a 1-for-300 reverse stock split was approved.

    This trade went as planned and holders of 299 shares or less were cashed out at the proposed $.60 per share. The September 12, 2012$.24 entry price provided a great annualized return. The deal was small but spread across multiple accounts was worth the time.

    One of the most interesting aspects of this deal was the price action of the common between announcement and completion. Traders that waited to enter would have been rewarded as the stock traded as low as $.08 before the split was effected. The ability to trade or enter enhanced 13e3 arbs has been an area of focus for me. In my analysis of many of these deals I have noticed patterns in the behavior of traders doing the arb and the investors that are either liquidating positions to get below the threshold to get paid out or have no interest in continuing ownership in a company that "goes dark". After a 13e3 deal is completed companies are no longer making filings and liquidity in the stock is very limited. The battle between new long positions of 299 or less and liquidations by investors can create trading opportunities and improved entry points.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jan 07 4:37 PM | Link | 1 Comment
  • Myrexis, Inc. (MYRX) Proposed Plan Of Dissolution

    On November 9, 2012 the dissolution and liquidation of Myrexis, Inc. (OTCPK:MYRX) pursuant to the Plan of Dissolution was unanimously approved by the Board of Directors, subject to an affirmative vote by the majority of shareholders.

    Delaware law allows a corporation to be dissolved after the approval of stockholders by filing a Certificate of Dissolution. After being dissolved, the corporation will continue to exist but can only wind up and liquidate. The common stock will cease trading and an initial liquidating distribution will be paid to final record date holders as soon as possible after the filing of the Certificate of Dissolution.

    The small cap liquidation is one of my favorite trades. My goal with these trades is to get back my entire investment in the initial liquidating distribution. All other distributions after the initial will be gravy. The company is usually very conservative with the initial distribution and many times you get paid continuing liquidating dividends for years later. The company will disclose on the DEF14A the estimated initial liquidating distribution, the date of the shareholder vote and the timing of additional liquidating distributions after the final record date.

    The Myrexis liquidation is pretty standard. Shareholders will vote to approve the Plan of Dissolution on January 23, 2013. The initial liquidating distribution estimated by the company in the DEF14A is between $2.67 and $2.83. The common is currently trading around $2.79. The uncertainty, as in most liquidations, is the amount of the total reserve held by the company. Myrexis estimates a reserve of between $12 and $7 million with $6.5 to $2.8 million of the reserve coming from AIA Litigation and unanticipated claims and contingencies. The amount held in reserves not used and the value of other asset sales will determine the value of additional liquidating distributions after the initial distribution. Myrexis anticipates paying a final liquidating distribution within three years of the final record date.

    On December 21, 2012 the company filed an 8k disclosing a settlement in regards to the AIA Litigation. Myrexis settled with AIA for $1,525,000 and will transfer all program rights and assets associated with several of Myrexis' programs. The settlement agreement has a significant impact on the estimated reserves the company is planning in the liquidation. I would expect the company will decrease the reserves and the initial distribution will be closer to the high end of the estimate.

    The deal does have risks. The shareholder vote could fail and the estimate of the distributions and timing will impact ROI. In rare instances shareholders could be forced to return liquidation payments if new liabilities or claims arise. Holders are liable limited to the amount of liquidating payments received. This is a good small deal to learn from. Deals get more complex and uncertain when dealing with less liquid assets. The Myrexis deal involves a significant amount of level I assets.

    The easiest way to find liquidations is by searching the SEC website using keywords and specific form filings. You can also do keyword searches of press releases on PR websites.

    Disclosure: I am long OTCPK:MYRX.

    Jan 07 4:37 PM | Link | Comment!
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