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Strategies & Market Trends : Dividend investing for retirement
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To: lizardK who wrote (29380)6/2/2018 11:36:59 AM
From: E_K_S3 Recommendations

Recommended By
Kip S
maverick61
RWS

  Read Replies (2) of 34328
 
Re: Orchids Paper Products Company (TIS)

On May 30, 2018 a "CT-Order" SEC document was filed by TIS that requested an extension of a previous grant of confidential treatment of information excluded from their 10K.

Companies would typically seek a confidential treatment order (CTO) to keep information secret that would otherwise put it at a competitive disadvantage if revealed. A company would seek the confidential treatment order by filing a formal request, a confidential treatment request (CTR), with the Securities and Exchange Commission (SEC).

For example, a company may apply for a confidential treatment order by completing a confidential treatment request to keep information regarding a pricing arrangement made with a potential acquisition target secret. This request could be made on the basis that the company's competitors may use this information to go after the target with a more competitive price. Other common items kept confidential include milestone payments and other technical specifications.
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I suspect that a deal is already on the table for TIS which was probably part of the original loan agreement. It may/could be a Private equity investor or some other party interested in the TIS assets and operation.

The market is signaling that it is a low ball offer and may/could involve some capital infusion to the bank for equity (specifically stock). It could be a substantial percentage of the company's equity that may/could result in (1) the issuance of more shares and (2) a reverse split after the recapitalization.

It's all speculation on my part but recent option activity shows huge open interest in the September/December Put Options at the $2.50 and $5.00 strike price.

If I was the Private Equity firm, I would want equity interest ahead of the line (ie that of the common share owners) as well as a share of the common share equity pie (ie warrants). So maybe there is something already on the table for that as the company shops for better terms and/or other investors.

TIS is better off in the long run to find such an equity partner (w/ deep pockets) and eliminate most if not all of their bank loan debt. If the common share equity remains after the recapitalization, it will be shared w/ the new equity partner.

For those that still own TIS shares, let's hope there is something left for the current shareholders. It still puzzles me that the previous CFO did not get this "recapitalization" deal done during his employment. Maybe his job was to package the company in such a way as to attract one or more equity investors and the new CFO (who has many years experience in specialty paper manufacture operations) is/was to be part of that package.

The recent sell off in the stock price was on low volume during the last several weeks (except Friday at 2.5x ADV) which signals to me there was some arbitrage share accumulation to cover the Open Interest on the large PUT position still open for September/December. (therefore watch the OI Put position to see if it shrinks and if any of the OI Call positions start to increase).

Based on the CT-Order extension request, it is taking a bit longer to finalize a deal but the option market is saying that it will be done by Q3 or Q4 of 2018.

Good Investing

EKS
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