GEEK - Internet America

[Guest Schwab711]

I thought for sure there was a thread for this company, but I can't find it...

 

Company Background: They previously had a broadband distribution company serving rural Texas that was sold in June 2015 for $13.5m (including all tax benefits and deferred revenue; so everything). They are now in liquidation after paying a large dividend on June 25th for $0.68.

 

Last quarterly report:

https://www.sec.gov/Archives/edgar/data/1001279/000114420415030503/v409683_10q.htm

This report shows ~$3.5m in cash on the balance sheet that has not been distributed and is being used to pay for the liquidation. Management does not have a severance (golden parachute) and this money should be available to be distributed after bankruptcy is completed (Texas courts).

 

Management has stated on June 16, 2015 (liquidation plan 8-k) that they expect to return $0.68 - $0.70 to shareholders (they have already returned $0.68). Current shares outstanding are 19,902,047. Thus, the entire $13.5m has been paid out. They should be left with $3.5m in cash and zero debt/liabilities.

 

However, why isn't another payment of ~$0.15 - $0.17 expected as well? (~$3m/20m shares = $0.15 value remaining). The stock currently sells for just $0.06 and is already in liquidation. Even if we assume all the previous liabilities remain, they will still have at least $1.2m (worth the current $0.06) while allowing for up to $600k in bankruptcy/liquidation expenses. Has anyone received clarity from management as to what liabilities and cash remain? When will the final payment occur?

 

Assuming all liabilities remain (which some were included in the sale), then we should expect a 2nd payment of $0.06 - $0.09. It's going to be tough to get even a small position at this point considering total dollar volume is ~$1,000/day ($500 at $0.03/shr).

 

Liquidation Plan:

https://www.sec.gov/Archives/edgar/data/1001279/000114420415037402/v413279_8k.htm

Management:

http://www.internetamerica.com/about-us/leadership.php

[HIPS]

Thanks a lot for flagging this situation up. Attached is the management's liquidation plan which is contained in the proxy statement which should clear up some of your questions below.

 

In our opinion this is a good buy at $0.025 and an absolutely cracking buy at the lows of $0.020 which occurred between 24th Jul and 4th August. Unfortuntely we were a bit too slow in finding this post and doing the work to get the position on.

 

Would be interested if you have a good broker for these very small and illiquid situations as right now we are waiting for a bit more size of come out (min 8k share trade) in order to absorb our trading costs.

 

Did a more fulsome post on the blog

Internet_America_Liquidation_2015.08.18_v1.pdf