Disclaimer: That is very illiquid and solely applicable for small PA’s like mine
Revenue Alternative Realty Traders (IOR) ($75MM market cap) is the smallest piece of the ARL/TCI/IOR Russian nesting doll, in a earlier life it was akin to a mortgage REIT (though its a c-corp), right this moment they solely personal one mortgage, their essential asset is a receivable from Pillar Asset Administration, the exterior supervisor and affiliate of the bulk proprietor of ARL/TCI/IOR. IOR has no cause to exist, TCI and an affiliate (RAI) personal 89.78% of IOR and are at present conducting a young provide (deadline simply prolonged to 1/29/25) at $18.00/share to push that possession degree above 90% so as to squeeze-out the remaining minority shareholders.
Plans for IOR.
Besides as disclosed within the Provide to Buy, TCI doesn’t have any current plan or proposal that will end result within the acquisition by any particular person of further securities of IOR (besides TCI could buy further Shares if out there at enticing pricing or TCI could buy all Shares tendered within the Provide if greater than 100,000 Shares are tendered), the disposition of securities of IOR, a unprecedented company transaction, akin to a merger, reorganization or liquidation, involving IOR, the sale or switch of a cloth quantity of IOR Shares (besides TCI reserves the proper to think about any such transactions in TCI’s discretion), any materials modifications to IOR’s current dividend coverage, indebtedness, capitalization, company construction, enterprise or any materials change to the composition of IOR’s administration or the IOR Board.
It’s anticipated that, initially following the conclusion of the Provide, the enterprise and operations of IOR will, besides as set forth on this Provide to Buy, be continued as a stand-alone enterprise unit considerably as they’re at present being performed. TCI will proceed to judge the enterprise and operations of IOR throughout and after consummation of the Provide and can take such actions it deems applicable beneath the circumstances then current. Thereafter, TCI intends to proceed to work with IOR’s administration as part of a complete overview of IOR’s enterprise, operations, capitalization and administration with a view to optimizing improvement of IOR’s potential together with TCI’s enterprise.
After completion or termination of the Provide, TCI could search to accumulate further Shares by open market purchases, privately negotiated transactions, or a young provide or change provide or in any other case upon phrases and at costs as TCI determines, which can be kind of than the value paid within the Provide. If TCI doesn’t purchase ample Shares within the Provide, together with any subsequent providing interval, to fulfill the Minimal Situation which might then put TCI (assuming it acquires the Shares held by its Affiliate) beneath the short-form merger provisions of the Nevada Revised Statutes, with no vote of IOR’s remaining stockholders, TCI will probably search to accumulate further Shares to position it able that the Minimal Situation would have been glad.
No Stockholder Approval Required.
Below the Nevada Revised Statutes, if TCI acquires, pursuant to the Provide or in any other case (together with by acquisition of the Shares held by its Affiliate), not less than 90% plus 1 of the excellent Shares, TCI believes it may, and should sooner or later, effectuate a merger beneath the short-form merger provisions of the Nevada Revised Statutes with no vote of the IOR stockholders. If TCI doesn’t finally purchase not less than 90% plus 1 Share of the excellent Shares, any merger or consolidation involving IOR and TCI would wish to hunt the adoption and approval thereof by a vote of IOR’s stockholders. Thus, assuming that the Minimal Situation is glad, upon consummation of the Provide, TCI (along with its Affiliate) would personal ample Shares to allow TCI, with out the vote of some other IOR stockholder, to fulfill the necessities to approve any merger or consolidation with no vote of IOR stockholders.
Shares at present commerce above the $18/share provide value, that means we may see a bump to shake out some extra shares previous to the squeeze-out.
The “receivable from associated events” is solely a money sweep again to Pillar Asset Administration, when some buyers make the remark that administration makes use of an organization as their very own private piggy financial institution, that is actually what is going on right here. Pillar is taking a mortgage out from IOR with no maturity date, the rate of interest was once prime + 100, however someway bought amended to a flat SOFR (some 3% above prime sometimes) final yr. In order that’s the kind of individuals we’re coping with right here.
The squeeze-out is meant to be finished at “truthful worth”, given we’re speaking about close to money and its a present asset (the receivable from associated events asset is ruled by a “money administration settlement”), ebook worth needs to be fairly near truthful worth.
Ebook worth is ~$29.71/share as of 9/30, it will have moved up above $30/share at yr finish. Now, I do not count on TCI/Pillar to pay full ebook, however someplace between $18 and $30 leaves plenty of room for administration to reap the benefits of minority shareholders whereas nonetheless offering some upside to a dormant inventory. The opposite large danger right here is timing, though this appears fairly nicely spelled out of the eventual path, guessing the squeeze-out occurs inside 9-12 months after the tender closes.
Disclosure: I personal shares of IOR