ALJJ

jamesmith

ALJ Regional Holdings, Inc. announces agreement to sell KES to Optima
http://finance.yahoo.com/news/al ... nces-215000916.html

ALJ Regional Holdings, Inc. Commences Tender offer to purchase up to 30,000,000 shares of its common stock
http://finance.yahoo.com/news/al ... nces-224300385.html

ALJJ is an quite interesting company, they find inevstment targets, go in by acquiring majority of shares, and turn it to be more efficient and profitable. It is no easy feat.
At early 2005, ALJJ started KES Acquisition Company, and used it to acquired KES(Kentucky Electric Steel), a steel mini-mill that recycles steel from scrap and produces bar flats at a low production cost. The acquisition used lot of debt as financing, so the result is ALJJ owns a profitable company with lots of debt. Since then, ALJJ is working on retiring debts and increasing EPS.





Company Earning Reports can be found here:
http://www.aljregionalholdings.com/financials.html
http://www.otcmarkets.com/stock/ALJJ/filings
http://financials.morningstar.co ... A&culture=en-us

KES's largest customer is Optima's Niagara Lasalle Corp. unit, which makes cold finished steel bars for auto markets.
Now ALJJ is planning to sell KES to Optima and return part of the profit to shareholders. If shareholder vote in favor of the sale.
After the sale, ALJJ will have $0.86 cash per share outstanding.
ALJJ announced tender offer for up to 30,000,000 shares of its common stock at a price per share not greater than $0.86 and no less than $0.84.
ALJJ has 57,090,319 shares outstanding and chairman Jess Ravich hold 19.59%  of them. Jess Ravich said he will not tender any of his shares in the tender offer and to vote in favor of the merger.
Exclude the chairman's shares, ALJJ has 45,780,662 shares available for 30,000,000 share tender(65.5%) Share went up to $0.77 after the news.
But not everything was smooth, the buyer Optima couldn't secure debt in time and asked for more time. Share prices went down to $0.6x because of fear Optima is not able to get financing needed.
Then in December 31, ALJJ annoucned a very strong Q3 earning report and sent share prices back to $0.7x.

ALJJ has capable management and if the deal with Optima went through should give it good return in a relatively short period of time.
ALJJ's current P/E is only 3.42, If the deal didn't went through, ALJJ's management has shown historically that they can bring down the debt and increase earning.

Risk:
Only part of the shares are tendered in the offer. Shares left will have cash value of roughly $0.86 with no debt. However, after selling KES, ALJJ will have no company to run, it will have to look for the next investment and there's no guarantee it will find the right investment.

I have entered into a small position in ALJJ, around 3% of my portfolio...

jamesmith

Wow, looks like I got lucky, they annoucned the anticipated closing date of merger and extension of tender offer :)

ALJ Regional Holdings, Inc. Announces Anticipated Closing Date Of Merger And Extension Of Tender Offer

http://www.thestreet.com/story/1 ... f-tender-offer.html

jamesmith

jamesmith 发表于 2013-1-18 11:07 AM
Wow, looks like I got lucky, they annoucned the anticipated closing date of merger and extension of  ...

The Tender offer is now extended to 1/31/2013.

I am debating if I I will contact my broker about the tender offer. The problem is if only part of my shares got tendered, then what price will the rest of the shares be? I guess it all depends on market confidence on this company, but this is a big unknown.

jamesmith

I  decided not to wait for tender and sold all of my ALJJ shares.

jamesmith

Tender Offer finished relatively quickly!

http://www.fortmilltimes.com/201 ... -inc-announces.html

30,000,000 shares of ALJ's common stock at a purchase price of $0.84 per share.
After the Tendor,  ALJ will have 27,446,598 shares of common stock issued and outstanding (29,646,598 on a fully diluted basis) and approximately $27.8 million in cash and receivables.

Now ALJ has no business to run, and shares can simply be valued by how much money they have.
27.8 million / 29,646,598 = $0.937 per share of cash

Let's see if they can find another business to invest in.