shamapant (80.99)

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Possible Tender Offer Situation?

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June 25, 2012 – Comments (3)

http://www.marketwatch.com/story/theragenicsr-announces-plans-to-repurchase-up-to-10-million-of-its-shares-in-a-modified-dutch-auction-tender-offer-2012-06-12

Theragenics will tender shares from $2-$2.4 to July 11th ...http://www.sec.gov/Archives/edgar/data/795551/000118811212001933/ex99-a1a.htm

Financing: Cash on hand....they have 38M in cash, 11M in receivables, and 17M in inventory where total liabilities is 35M.....they have plenty of financing.

So in my eyes it looks like this is an easy return situation...but I'm inexperienced with this stuff. Do i expect the tender to be at $2.4? or like how do I figure that out the risk that the tender price will be at $2 instead of $2.4?

3 Comments – Post Your Own

#1) On June 25, 2012 at 6:23 PM, MegaShort (99.95) wrote:

Some back of the envelope calculations.

They have offered to accept up to 5M shares at up to $10M.

Volume was 600K today compared with an average of 80K. So that is an extra 520K shares more than average that might be bought with the intent to tender.

There are 12 more trading days until the completion of the offer. 520K x 12 = 6.24M. Add in previously held shares which will be tendered, including 401(k) and ESPP shares. This number is hard to guess but could be fairly high. So I think it will probably be oversubscribed.

Estimate how many investors will pick each option, for example:
$2.00: 0%
$2.10: 10%
$2.20: 15%
$2.30: 15%
$2.40: 10%
Best price: 50% (This number is a big wildcard. Smaller would be better.)

Then estimate how much it will be oversubscribed. Using the numbers above:
less than 4.9M shares tendered: $2.40
4.9M - 5.6M shares tendered: $2.30
5.6M - 6.5M shares tendered: $2.20
6.5M - 8.2M shareds tendered: $2.10
over 8.2M shares tendered: $2.00

These numbers might not be correct, check them yourself. Note that odd lots (<100 shares) have priority and larger shareholders may be prorated.

Looks like a well-designed tender and maybe an attractive situation.

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#2) On June 26, 2012 at 9:06 AM, MegaShort (99.95) wrote:

I think checking “Shares Tendered at a Price Determined Pursuant to the Offer” is exactly equivalent to checking $2.00, since both maximize your chance of tendering. But I suspect many more people select that option than $2.

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#3) On July 18, 2012 at 4:22 PM, MegaShort (99.95) wrote: