Author Topic: SYCRF (OTC) - Syncora Holdings  (Read 4322 times)

Foreign Tuffett

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Re: SYCRF (OTC) - Syncora Holdings
« Reply #10 on: August 15, 2019, 02:00:21 PM »
Syncora Holdings today announced the planned sale of their main asset, the Guarantee Insurance business (SGI), for 392.5 mm USD in cash.

The announcement follows the expolaration of strategic alternatives as announced in May. The price came as a clear disappointment to the market and the stock is down about 13% today to about 4.60$ as of this writing. If the deal goes through, Syncora will hold:

392.5mm USD Cash from SGI
32mm USD other Cash
certain assets related to Pike Point LLC (100% owned; book value of 8.5mm USD per Dec 2018)
80% of Swap Financial Group (100% book value of 13mm USD; 10.5mm USD for 80% per Dec 2018)

They also have pref shares outstanding with a current liquidity prefence of 37mm USD. In total, that gives an expected distribution, assuming book value for Pike Point and Swap Financial of 4.66 USD/share

Further items to adjust from here

+ Syncora holds 300mm USD in NOL
+ they hold a property in Detroit through Pike Point
- Cost / Cash Burn to run and wind down the company

The agreement states explicitly that Syncora may walk away  if they find a better deal by 13 September and pay 15.7mm USD. It is nothing I would expect given they just ran a bidding process but given the price is on the low side of expectations (and adjusted book value is 7.86 USD/share), it is not zero either.

Syncora has yet to announce the precise further procedure in terms of distribution. Still holding my position here.

Why hold if the stock is at $4.60 and you expect a $4.66 distribution? That's not much of a spread. What kind of value are you placing on the Detroit property and NOLs?