GREYSTONE LOGISTICS INC GLGI
June 28, 2013 - 8:26pm EST by
chewy
2013 2014
Price: 0.45 EPS $0.00 $0.00
Shares Out. (in M): 26 P/E 0.0x 0.0x
Market Cap (in $M): 12 P/FCF 0.0x 0.0x
Net Debt (in $M): 0 EBIT 0 0
TEV ($): 12 TEV/EBIT 0.0x 0.0x

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  • Reverse split
  • Arbitrage
  • Delisting
  • Insider Ownership

Description

Greystone Logistics (ticker: GLGI) announced on June 18th that they will be holding a special meeting of shareholders on August 2nd to approve an amendment to the Company's certificate of incorporation to effect a reverse stock split of its common stock at a ratio of 1-for-10,000 shares. The rationale behind the reverse stock split is to reduce the number of record holders of their common stock to fewer than 300, so that they will be eligible to terminate the public registration of their common stock and eliminate the costs of public filings. Under this reverse stock split, any shareholder owning fewer than 10,000 shares of GLGI will be cashed out at a price of $0.50/sh, which, as of today’s closing price of $0.45, would generate a gross return of 11% in 42 days, for an IRR% of 150%. Given the small dollar amount of the transaction, this idea is strictly for PAs.

The proxy can be found here:

http://www.sec.gov/Archives/edgar/data/1088413/000107261313000287/pre14a_17525.htm

 

Back of the Envelope:

 

Share Price (06/28/13)

$0.45

Cash to be Received

$0.50

Spread

$0.05

Gross %

11%

IRR %

150%

 

Key Dates:

(1)    Announcement of reverse stock split – June 18th

(2)    Effective date for voting rights – July 1st

(3)    Special Meeting of Shareholders – August 2nd

(4)    Estimated Distribution Date – August 9th

Other Notes:

(1)    Insider’s effectively own 47.5% of the company (through preferred and common shares), giving confidence that the deal will go through.

(2)    Simple majority needed to approve the transaction.

(3)    Why leave $450 on the table?

In summary, we believe that you can buy $4,550 worth of GLGI stock and receive $5,000 of cash around August 9th, with very little risk of the deal breaking given the large insider ownership.

I do not hold a position of employment, directorship, or consultancy with the issuer.
Neither I nor others I advise hold a material investment in the issuer's securities.

Catalyst

 
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