bskptkl Posted July 14, 2016 Share Posted July 14, 2016 Bought more PIP today $2.50 They said last March: "In the event that SIGA pays PharmAthene cash in full and barring any unexpected material events, PharmAthene currently expects that it will distribute at least 90% of the after tax net cash proceeds to its shareholders. The timing and form of distribution will depend upon PharmAthene's analysis of its current situation, applicable corporate statutes related to distributions and the economic consequences to its shareholders of any such distribution. In addition to the distribution of these cash proceeds, PharmAthene intends to seek an M&A or other partnering transactions to maximize the value of its remaining assets and anthrax vaccine programs." 4/7/2016 plan approval 7/14/2016 $(2.50) price now 10/19/2016 SIGA pays claim 12/3/2016 $2.68 PIP pays distribution 10/19/2016 $0.10 stub trades 1/3 NAV 31% XIRR $205 judgement 195 days 8.75% interest rate $10 additional interest $215 total payment $149 NOL $66 taxable $43 after tax $192 net $172 distribute 90% 64 PIP shares out $2.68 distribution per share $19 retain $0.30 stub cash value plus IP and existing cash Link to comment Share on other sites More sharing options...
snow pea Posted July 14, 2016 Share Posted July 14, 2016 OK, interesting on its face. I have a couple questions about things I assume you've thought about, if you're willing to discuss your thoughts: It appears that SIGA could turn over 100% of its stock in lieu of the cash payment. Do you have an estimate of the likelihood of this and do you have an opinion on the value of SIGA? It looks like the book value of SIGA is ~185M, for what that's worth. It also looks like SIGA just sent over 20M payment to extend the deadline to settle the rest of the judgement. Seems like something similar could happen again, and each delay to settlement of the judgement drops the IRR of an investment in PIP, no? Thanks for posting, I expect I'll at least watch as a learning experience. Link to comment Share on other sites More sharing options...
bskptkl Posted July 14, 2016 Author Share Posted July 14, 2016 SIGA emerged from bankruptcy recently. By its Plan of reorg, it could extend once for 30 days, which it did. Recently SIGA announced accelerated payments from gov https://www.sec.gov/Archives/edgar/data/1010086/000114036116071477/form8k.htm It also filed an S1 talking about financing plans to pay PIP https://www.sec.gov/Archives/edgar/data/1010086/000156761916002468/s001333x1_s1.htm 100 mm debt and 35 mm in a rights offering So I believe there is zero chance they don't opt to pay the claim in cash. To do otherwise would be a boon for PIP. Link to comment Share on other sites More sharing options...
bskptkl Posted July 14, 2016 Author Share Posted July 14, 2016 SIGA emerged from bankruptcy recently. By its Plan of reorg, it could extend once for 30 days, which it did. Recently SIGA announced accelerated payments from gov https://www.sec.gov/Archives/edgar/data/1010086/000114036116071477/form8k.htm It also filed an S1 talking about financing plans to pay PIP https://www.sec.gov/Archives/edgar/data/1010086/000156761916002468/s001333x1_s1.htm 100 mm debt and 35 mm in a rights offering So I believe there is zero chance they don't opt to pay the claim in cash. To do otherwise would be a boon for PIP. Didn't finish - SIGA has rights to small pox drug they sell to BARDA. Value has been estimated at 1B in court documents stemming from litigation between SIGA and PIP. The contract with BARDA has something like 200 mm to go - to get it all they must get FDA approval. Link to comment Share on other sites More sharing options...
bigbadwolf Posted July 19, 2016 Share Posted July 19, 2016 Could SIGA still appeal and overturn the ruling? Link to comment Share on other sites More sharing options...
bskptkl Posted July 19, 2016 Author Share Posted July 19, 2016 Could SIGA still appeal and overturn the ruling? No. They already tried that and failed while in bankruptcy. PIP dominated the creditors committee (by way of their claim) and had a large say in the eventual plan of reorg. SIGA paid $5 million on emergence and $20 million to extend until October. Only $180 million plus interest to go. I do think there are at least some discussion between 2 companies regarding merger transaction of some sort, but there is ill will to say the least between 2 so this may be a long shot. I'm long both SIGA and PIP, though I have been trimming SIGA and adding to PIP at these levels. Link to comment Share on other sites More sharing options...
bskptkl Posted July 30, 2016 Author Share Posted July 30, 2016 SIGA is going to be back in court 8/15 to amend the plan. They want to extend the final payment date to PIP by 42 days until 11/30. They have agreed with PIP that in order to do so, SIGA must make a partial payment of $100 million. This payment will be treated the same as the earlier $20 million payment. SIGA will then have roughly $83 million plus interest (of approximately $10 million) left to pay. https://cases.primeclerk.com/siga/Home-DocketInfo Motion is docket entry 987. So now I think PIP shareholders won't get money until 12/30 or so, reducing IRR a bit. I estimate it's still a plus 25% IRR at $2.55 a PIP share though...provided PIP does what it says it will and returns 90% of the proceeds to shareholders by way of a distribution. Link to comment Share on other sites More sharing options...
shalab Posted September 24, 2016 Share Posted September 24, 2016 Good idea - hit 2.91 before dropping back to 2.89 Link to comment Share on other sites More sharing options...
bskptkl Posted November 18, 2016 Author Share Posted November 18, 2016 PIP announced a $2.91 distribution to be paid on 2/3/17. They will distribute 98% of the award from SIGA, more than the 90% they previously indicated. But distribution is a little later than I expected - possibly due to anticipated changing tax policies. I expect stub value to be roughly $0.22. I sold the opening at $3.10. All in all a very good IRR (40% or so) on this idea. Link to comment Share on other sites More sharing options...
cookiemonster Posted December 13, 2016 Share Posted December 13, 2016 Congrats to those who were involved here- it's played out well. Just curious what value is left in the stub? Does PIP have a business plan going forward? Thx Link to comment Share on other sites More sharing options...
bskptkl Posted December 13, 2016 Author Share Posted December 13, 2016 I haven't looked too closely as I have exited the position, but they will have about 25 cents of cash. They have an anthrax drug that they were working on as I recall. Link to comment Share on other sites More sharing options...
snow pea Posted February 6, 2017 Share Posted February 6, 2017 I'm noticing that this is trading today up to ~$.50 after the 2.91 special div. It certainly seems to have worked out even better (albeit on a slightly longer timescale) than bskptkl anticipated back in July when it was trading for $2.50. Thanks for pointing this idea out; even though I never actually bought in, it's nice to watch how this sort of thing can play out. Link to comment Share on other sites More sharing options...
crastogi Posted February 7, 2017 Share Posted February 7, 2017 So it spiked to 1.37 today. Since I did not sell after the special dividend, this is like the gift that keeps on giving, LOL. Now if I can only figure out why Link to comment Share on other sites More sharing options...
bskptkl Posted February 8, 2017 Author Share Posted February 8, 2017 So it spiked to 1.37 today. Since I did not sell after the special dividend, this is like the gift that keeps on giving, LOL. Now if I can only figure out why Nicely played! It was too hard for me to keep any. I should learn from that...never underestimate someone else paying funny prices I guess. Link to comment Share on other sites More sharing options...
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