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PRXI: Could a Sale Be Announced Soon?

June 04, 2012 | About:

I mentioned PRXI a few months ago as an interesting special situation. Since that time, the share price has remained relatively flat as the market awaits more news regarding the sale of their Titanic assets.

So the question on every investor’s mind is: When will more news regarding the sale be announced?

There’s good reason to believe it will be in the next week.

Here’s why:

PRXI was originally scheduled to finish their auction on April 4 and announce the results on April 11. Per their 10-K:

The Company is party to a Consignment Agreement with Guernsey’s auction house to sell the Company’s Titanic artifacts and related intellectual property. If and when a transaction is closed, the Company will be required to pay Guernsey’s a fee of up to 8% of the sale price if a purchase agreement is entered into within 60 days of the auction deadline, and up to 4% of the sale price if a purchase agreement is entered into thereafter. The actual amount of the commission will depend on the sale price, identity of the purchasing party and the date when the sale is closed.

That means that Guernsey’s has some serious motivation ($5 million) to complete the sale in the next couple of days. If we assume that the 60-day deadline applies to the April 11 announce date, Guernsey’s would have until the end of the week to get a deal done or lose 4% of the deal. That, in addition to a two- or three-day lag for a press release to be drawn up and issued, means we should hear on a deal by next Thursday (June 14) at the latest.

And what if we don’t hear about a deal by then?

Well, all isn’t lost. PRXI will be paying Guernsey’s a much lower auction fee, which is nice in terms of ultimate cash flow (PRXI has announced several times they will distribute the proceeds to shareholders). However, it doesn’t bode well for the value of the collection or the collection’s ultimate sale-ability (I’m making that word up if it isn’t a word) if a premier auction house couldn’t sell the set in six months (they started the sale process in January) with a $5 million fee on the line.

In any case, we will see. I still think PRXI is trading well below the ultimate value of the collection.

Disclosure: Long PRXI

Rating: 3.0/5 (10 votes)


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