BIND THERAPEUTICS INC BINDQ
August 08, 2016 - 9:44am EST by
TheEnterprisingInvestor
2016 2017
Price: 0.77 EPS 0 0
Shares Out. (in M): 21 P/E 0 0
Market Cap (in $M): 16 P/FCF 0 0
Net Debt (in $M): -21 EBIT 0 0
TEV ($): -5 TEV/EBIT 0 0

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  • Personal Account Idea
  • Special Situation
  • Liquidation
  • Bankruptcy
 

Description

This is a short writeup, as it's not all that complicated from here on out.

Liquidation Special Sit- appropriate for PAs (IRAs because of the short term cap gain) and small funds

Strategy: buy $1 for $0.77, get most of the dollar by year end.

Bind Therapeutics is in bankruptcy and liquidating.  They have sold all their assets to Pfizer, the sale was confirmed by the bankruptcy court and it has already closed.  Bind sold its assets for $40m, with $38m upfront and the remainder subject to a holdback for potential adjustments to the sale price, assuming they get the holdback it will be free in December. and distributed shortly thereafter  The CEO and the board have already been dismissed.  The majority of the liquidation should occur in October after the bankruptcy court approves the dissolution in September.  

The company hasn't provided a liquidation estimate, but here's what their attorney said after the deal was approved:

"Pfizer Inc. won bankruptcy-court approval Wednesday to buy the assets of Bind Therapeutics after an auction doubled Pfizer's starting offer, for a final price of $40 million.

The results mean estimated profits of $22.5 million to be divided among Bind shareholders, company lawyer Peter Gilhuly said at the Wednesday court hearing when the sale was approved."

That works out to about $1.08/sh. 

As of the end of April Bind had $16m in cash and securities with $14.5m of debt accruing at $3166/day or another 300k if they paid the debt post sale.  It burned $5.5m in April and about $13m in Q1 ($4.3m/mo).  They filed bankruptcy in April so I think its reasonable to assume the uptick was due to the restructuring.  I assume they get the $40m and burn another $1.2m/mo, until they make distributions.  I get to about $1.01.  

Counting the Cash  
 $16.00 Starting Cash (4/30/2016)
 $40.00 PFE Cash  
 $(14.80) Debt plus int @ $3166/d
 $(3.60) add'l mo's burn ($1.2m/mo)
 $(16.50) Est. May through July 31 burn
 $21.10 Cash left for shareholders
             20.80 Shares Outstanding (m)
 $1.01 Cash for Dist/sh

 

This should be cleaned up by year end and for $0.77 today you can earn 32% based on my estimates and 40% return based on what Bind's attorney says.  I can think of a lot worse ways to tie up money 3-5 months.  

Risks

They don't get the holdback amount, costs you ~$0.10/sh

I've underestimated the burn rate from here

Some claims against the company's estate emerge

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise do not hold a material investment in the issuer's securities.

Catalyst

Clarity in an 8k on distribution est.

Approval of liquidation plan (Sept)

 

    sort by    

    Description

    This is a short writeup, as it's not all that complicated from here on out.

    Liquidation Special Sit- appropriate for PAs (IRAs because of the short term cap gain) and small funds

    Strategy: buy $1 for $0.77, get most of the dollar by year end.

    Bind Therapeutics is in bankruptcy and liquidating.  They have sold all their assets to Pfizer, the sale was confirmed by the bankruptcy court and it has already closed.  Bind sold its assets for $40m, with $38m upfront and the remainder subject to a holdback for potential adjustments to the sale price, assuming they get the holdback it will be free in December. and distributed shortly thereafter  The CEO and the board have already been dismissed.  The majority of the liquidation should occur in October after the bankruptcy court approves the dissolution in September.  

    The company hasn't provided a liquidation estimate, but here's what their attorney said after the deal was approved:

    "Pfizer Inc. won bankruptcy-court approval Wednesday to buy the assets of Bind Therapeutics after an auction doubled Pfizer's starting offer, for a final price of $40 million.

    The results mean estimated profits of $22.5 million to be divided among Bind shareholders, company lawyer Peter Gilhuly said at the Wednesday court hearing when the sale was approved."

    That works out to about $1.08/sh. 

    As of the end of April Bind had $16m in cash and securities with $14.5m of debt accruing at $3166/day or another 300k if they paid the debt post sale.  It burned $5.5m in April and about $13m in Q1 ($4.3m/mo).  They filed bankruptcy in April so I think its reasonable to assume the uptick was due to the restructuring.  I assume they get the $40m and burn another $1.2m/mo, until they make distributions.  I get to about $1.01.  

    Counting the Cash  
     $16.00 Starting Cash (4/30/2016)
     $40.00 PFE Cash  
     $(14.80) Debt plus int @ $3166/d
     $(3.60) add'l mo's burn ($1.2m/mo)
     $(16.50) Est. May through July 31 burn
     $21.10 Cash left for shareholders
                 20.80 Shares Outstanding (m)
     $1.01 Cash for Dist/sh

     

    This should be cleaned up by year end and for $0.77 today you can earn 32% based on my estimates and 40% return based on what Bind's attorney says.  I can think of a lot worse ways to tie up money 3-5 months.  

    Risks

    They don't get the holdback amount, costs you ~$0.10/sh

    I've underestimated the burn rate from here

    Some claims against the company's estate emerge

    I do not hold a position with the issuer such as employment, directorship, or consultancy.
    I and/or others I advise do not hold a material investment in the issuer's securities.

    Catalyst

    Clarity in an 8k on distribution est.

    Approval of liquidation plan (Sept)

     

    Messages


    SubjectRe: Re: Re: Re: Question
    Entry08/16/2016 11:53 AM
    Membermrsox977

    Thank you for the great idea.

    So we have:

    Cash + A/R (including holdback): $33.2

    Less Claims: ($5.2)

    Admin: ($2m)

    Tax Liab ($200k)

    - - - -

    NAV: $25.8m

    / 20.8m shares = $1.24 per share

    You still get to at least $1.00 per share (12% upisde) if somebody really tries to loot this for fees and takes off another $5m ($0.24c/share)


    SubjectRe: Re: Re: Re: Re: Question
    Entry08/16/2016 02:51 PM
    Memberdman976

    Docket #352 (Second Monthly Application of Cowen & Co......) discusses Cowen's fees.  It says they're owed $1.5mln for a sale of debtor's assets inside Chpt 11.  pg 4.


    SubjectRe: Re: Re: Re: Re: Re: Question
    Entry08/16/2016 02:51 PM
    Memberdman976

    + 2.5% of the aggregate consideration of such sale, sbuject to certain credits.  


    SubjectRe: Re: Re: Re: Re: Re: Re: Question
    Entry08/16/2016 06:09 PM
    Membermrsox977

    this shaves 11c from NAV - could be buffered by the 9c in holdbacks.


    SubjectRe: Re: wild west
    Entry08/31/2016 10:33 AM
    Memberpat110

    yes today....


    SubjectRe: Re: Re: wild west
    Entry08/31/2016 10:39 AM
    MemberArturo

    I think something similar happened with AGUNF.  There have been other cases (I can't remember the names) where distributions went to the holders who bought after the official transfer date.

     


    SubjectRe: Re: Re: Re: Re: wild west
    Entry08/31/2016 11:52 AM
    MemberRay Palmer

    Is "them" the company? I have had companies tell me the wrong info before in a very similar situation (the company was bankrupt, shareholder date passed. Lawyer for the co told me emphatically anyone buying now was buying worthless shares.... turns out they were trading due bill.). Not saying "them" is wrong, just that often even the ocmpany isn't sure.


    SubjectRe: Re: Re: Re: Re: wild west
    Entry08/31/2016 11:53 AM
    MemberYCOMBINATOR

    Just curious, do you think whoever you spoke with knows the difference between a record holder at the transfer agent and a street name owner of stock? The distiction is crucial given the language of the distribution. Thanks.


    SubjectRe: Re: Re: Re: Re: Re: Re: Re: Re: wild west
    Entry08/31/2016 01:54 PM
    Membermajic06

    If they are, then who is the seller today?  


    SubjectRe: Re: Re: Re: Re: Re: Re: Re: Re: Re: wild west
    Entry08/31/2016 02:13 PM
    Memberci230

    If you have no position:
    (a) Agree with YCOM, buy today, get distro-$0.30 cost, Cede will get proceeds and pass them along to holders on a pre-specified x-date.
    (b) Disagree with YCOM, short shares, should be useless.

    If you own stock prior to the record date:
    (a) Agree with YCOM, hold or buy more. Get all the marbles!
    (b) Disagree with YCOM, sell everything so you get the distribution+$0.30 cost. 

    Evidently there are enough people who believe (a) and (b) out there that we have a market clearing price of $0.30!  I'm not involved, but in the past I've gotten better information calling exchanges, transfer agents, record holders, etc. rather than the company.


    SubjectRe: Re: Re: Re: Re: Re: Re: Re: Re: Re: wild west
    Entry08/31/2016 02:20 PM
    Memberci230

    For what it's worth, the 10-Q filed in mid-August, mentions the August 30th record date multiple times, and calls this out in the RISK FACTORS section:

    Our common stock was delisted by NASDAQ and is currently trading on an over-the-counter market, which may limit the liquidity of our common stock and increase its volatility. Trading in shares of our common stock during the pendency of our Chapter 11 cases is highly speculative and poses substantial risks. Purchasers of our common stock after August 30, 2016 will not receive any cash distributions under the Plan of Liquidation.

    On August 1, 2016, our common stock was delisted from The NASDAQ Global Select Market.  Our common stock is currently quoted on an over-the-counter market.  The delisting of our common stock from NASDAQ could limit the liquidity of our common stock and increase the volatility in the price of our common stock. We expect further trading in our common stock to be limited, and our stockholders may not be able to resell our common stock for their purchase price or at all. Trading prices for our common stock may bear little or no relationship to the actual recovery, if any, by holders in our Chapter 11 cases. In addition, under our Plan of Liquidation, only stockholders of record on August 30, 2016 are entitled to payment as part of the Initial Distribution or any additional cash distribution that may occur. If you purchase our common stock subsequent to August 30, 2016, you will not be entitled to payment as part of the Initial Distribution or any subsequent cash distribution if our Plan of Liquidation is confirmed by the Bankruptcy Court. Accordingly, we urge extreme caution with respect to existing and future investments in our common stock.


    Subjectmore info
    Entry08/31/2016 02:23 PM
    Memberpat110

    This is the interpretation from restructuring agent.  Also in talking to him, he could not understand why people would be buying today.  My guess is that given what the company put out; they will choose to pay the individuals directly that held on 8/30. (if thats possible) ... 

     

    We have reached out to Cede already and as I mentioned (I believe to you – too many calls to remember each one) we will either pay Cede who will have the responsibility to pay the record holders per their books or Cede will provide us with the individual record holders and we will then pay the individuals.  We are too early in the process and discussions to know how this will play out.

     

     

     

    Geoff Berman


    SubjectRe: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: wild west
    Entry08/31/2016 02:25 PM
    MemberYCOMBINATOR

    What a mess for these guys. There preceding sentence to the one you bolded: "In addition, under our Plan of Liquidation, only stockholders of record on August 30, 2016 are entitled to payment as part of the Initial Distribution or any additional cash distribution that may occur."

    "Stockholders of record" has a specific meaning. Some securities class action lawyers will sort this out.


    SubjectRe: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: wild west
    Entry08/31/2016 02:31 PM
    Memberci230

    "Stockholders of record" for me always meant that I had traded and the trade had cleared prior to that date.  Maybe it's different for hedge funds rather than individuals.  Regardless of whather you believe "Stockholders of record" refers to individual owners or Cede, the bolded sentence makes clear the company's intentions, that purchasers after August 30th are buying bupkis. 


    SubjectRe: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: wild west
    Entry08/31/2016 02:36 PM
    MemberYCOMBINATOR

    It's a term with a specific legal meaning. You learn about it when you try to nominate directors or enforce your shareholder inspection rights, regardless of whether you are an individual or institutional holder.

     


    SubjectRe: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: wild west
    Entry08/31/2016 02:55 PM
    MemberYCOMBINATOR

    One thing I feel sure of, you should reduce your distribution estimate by the legal fees required to defend a lawsuit by either (1) people who sold today; or (2) people who bought today. They let this thing trade and played loose with terms that have specific legal meanings (record holders vs. beneficial holders). Anyway, a beer money spec... back to working on things that will actually matter.


    SubjectRe: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: wild west
    Entry08/31/2016 03:50 PM
    MemberTheEnterprisingInvestor

    What does that mean exactly?  DTC has had things clarified?


    SubjectRe: Re: Re: more info
    Entry09/01/2016 09:30 AM
    Memberbroncos727

    Adds nothing though - of course they have a shareholder of record list. Those are the shareholders that have certificates as opposed to those with share in street name.

     

    I am reminded of Purchase Pro bankruptcy case from several years ago. They had a record date that was years before the distribution date and were adamant that they would only pay beneficial holders as at the record date - in other words they wouldn't pay DTC directly and let them work it out. It was a giant cluster. They ended up making shareholders file claims. 


    SubjectRe: Re: Re: Re: more info
    Entry09/01/2016 10:10 AM
    MemberYCOMBINATOR

    Someone reminded me that this happened in the HEARQ liquidation, which has a history on VIC.

    Some holders sold after the declared ex-distribution date thinking they could sell + get the distribution (being extra greedy). I believe because the trustee told them so. They didn't get the distribution because DTC has procedures for doing these things. They ended suing the trustee and eventually the trustee settled with them. The trustee paid them out of estate assets, which screwed over all holders for the trustee's mistake. Upstanding guy, that trustee.

    Amazing to me that these restructuring agents don't talk to DTC BEFOREHAND to find out how it all works.


    SubjectFINRA daily list
    Entry09/01/2016 10:49 AM
    Memberdman976

    9/01/16

    says it will NOT be quoted ex.  says to rely on the bankruptcy documents and the issuer's SEC filings.  


    SubjectCurrent buyers
    Entry10/06/2016 08:15 PM
    Memberalcideholder

    SO if someone bought the shares now what will they get when the liquidation occurs?


    SubjectRe: W9 required to get paid!
    Entry04/24/2017 04:59 PM
    Memberbroncos727

    Pat, Thanks for keeping track of this thread.  Has anyone been paid yet?  I own a decent amount of this.  I can't recall all the details, but I had written this off as a goose egg.  I will read docket 642, in the meantime, a glimmer of hope has been rekindled.

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