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.

http://scafg.gcs-web.com/news-releases/news-release-details/syncora-holdings-ltd-announces-agreement-sell-syncora-guarantee

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?