TSQD exercises option - BIG (good!?)news - at a 29% ratio - no discount
Thanks for pointing out the info from the S-1:
www2.edgar-online.com
Wow! TSQD is exercising 200,000 of the 3.2M option. I didn't know they could only exercise a part of the option, but the filing spells it out quite nicely (very creative and beneficial both TSQD and DRIV). TSQD sells 200,000 (for ~$6 million at DRIV $30), Fujitsu sells 200,000 shares, Ronning sells 70,000 (of total ~3M), and a couple other major holders sell of portion of their holdings. But, now that this has been filed, and will soon be executed, TSQD will get a full (non-discounted) benefit from their option.
A couple other points from the S-1:
- Has a nice update of DRIV's recent (limited) history, including good discussion on risks and competitors.
- Estimated selling price was $19.375, so if present price continues, they'll get more than they planned for.
- The offering is for 3,000,000, but they'll sell up to 3,450,000 if BT Alex Brown gets in an over sold position (which would be nice).
A couple TSQD observations:
- TSQD said they had enough cash to get through this quarter without exercising the DRIV option, so IMO they are taking a cautious, calculated approach to add to their cash supply (pay some taxes), and move toward their ultimate secret plan. No panic here.
- TSQD's patience looks like it may pay off bigtime for investors. They could get ~$6M from this sales, vs. if they had sold when DRIV was at $5 (only $1 million). One problem may be that they only expected (at the time) to sell at ~$19, what will they ever do with this additional money?
- TSQD's reduced % ownership (to be 16.23%) of DRIV reduces the risks that some of us (myself included) thought DRIV might have been exposed to with TSQD's option so open ended and ambiguous. Also, the methodical and responsible way in which TSQD is exercising the option is a relief to me. Their approach makes me feel more comfortable about them receiving the full 29% (plus some) for their DRIV shares. A panic move would have been to announce TSQD would exercise the full option as soon as price hit $20, which would have hurt DRIV, and probably would have resulted in TSQD realizing a ratio of about ~10-15% of DRIV at $20, which is what the market has been saying.
- Friday from 12-1 p.m. was strange. DRIV and TSQD both went only up, volume was heavy, but not REAL heavy. Many investors (myself included) were doing the family thing, so its possible things were affected by abnormal trading (?), or possibly TSQD had trouble following DRIV because of the recent influx of investors with less DRIV/TSQD experience, and (most likely IMHO) investors had not yet digested the S-1 and their was alot of uncertainty out there.
- TSQD may have reached the point were there are not enough informed risk-averse traders to keep it flying with DRIV. If TSQD keeps losing ground, DRIV is the superior investment. If the news on TSQD gets out to more risk-loving investors and compels them to stay with TSQD until more of the option is exercised, TSQD may be a better play. If somebody knows what WILL happen, please let me know.
General observations:
- TSQD should issue a release ASAP to clear things up. I know in the past they have said that they would be cautious with the DRIV option, to maximize shareholder benefit, and that they would not comment on the option in any way publicly so as not to limit their options (which they say are plentiful). Now that they've exercised part of the option, they have no choice but to issue at least a partial explanation.
- Doc, you've been in and out of DRIV as much as the rest of us, and your opinions have changed (good and bad) as new information becomes available. In light of the S-1, do you still think "TSQD is dead", partially dead, night of the living BB:OTC dead, or could it be about to may another reincarnation, into a $100 million serious player. I think they'll do well this quarter (small loss), maybe profitable in 1Q-1999, then they'll announce major plans around that time for the DRIV option which I confidently predict NOBODY here will be able to predict. BTW - I totally agree that if you are a long term believer of DRIV alone, there is no reason to risk playing the TSQD game.
- Tomorrow could be more volatile than the day of the IPO if DRIV makes its anticipated move, and word gets out about TSQD. Alot of people ran TSQD from $2 to $7 prior to the IPO in anticipation of the kind of exposure and enthusiasm DRIV is now experiencing at $30. Having reviewed the S-1, I'm surprised there were no posts sooner than today about this.
- The DRIV/TSQD ratio slouched to ~10% the past two trading sessions, but fluctuated up to 12.5% (its recent trading average). If investor sentiment shifts back to TSDQ for ANY reason, TSQD will get a 50% bonus by returning its ratio to 15%. I sure which I'd taken advantage the last time TSQD traded at a ratio less than 10%. My mind is not made up, I would be very tempted to buy a little more if the ratio sinks below 10%, and I would think seriously of selling if the ratio got above 17%. Looking at COOL/WCAP, ratios can shoot up or down in a matter of minutes.
So, what do you all think. Sink or swim for TSQD? |
