RE:RE:Why a buyout offer is iminent. Swine, I think your $25m debt for the VMC is too high. I recall the debt is slightly under $13m for the VMC. This assumes that part of the debt which is repayable out of Econiche royalties does not have to be repaid.
All this is based on my proforma calculations on debt. Since the sale of animal health closed on April 15th, they have not yet published a clean version of what debt is still outstanding. It will be much easier to analyse once they publish their June 30th annual report. The balance sheet will be clean, meaning no adjustments needed for sale of animal health. I expect this to be released in the first week of September.
I also think your forecast of $5m for VMC sale proceeds is too low. The company got an independent appraisal of the VMC so they could write it down to that level. The appraisal was $10m (net of fees for selling) per the March 2014 financial statements (see Note 2). In addition, the office building is on the books for $2.6m (see Note 7). Accountants are conservative in their valuations. For example, if inventory cannot be sold for more than it cost to make, it is written down to carry on the books at selling price less a normal profit margin.
The company was talking about putting the VMC assets, the debt associated with the VMC as well as the tax shield from non-capital losses all into an incorporated subsidiary. The buyer of the VMC could then just buy the shares of the subsidiary so the buyer can get the benefit of the tax shield. That means it is likely the VMC asset and debt will be gone at the same time.
There is still some other debt on the books relating to Urocidin, but that is repayable out of royalties on Urocidin when earned. I don't count that as debt.