Principal Benefit: Capitalize on Undervaluation with Minimal Risk
Undervaluation is an opportunity, not a problem. Depending upon volatility and equity capital costs, a Cashless Buybacktm exchange offer can allow a company trading at $10 per share to sell stock at $30 per share as soon as its stock rises to a $16 target anytime within 3 years (or, upon hitting the target, the company can instead repurchase 20% of its outstanding shares at a cost of $0, i.e. zero). Importantly, if the target is missed, the firm and its participating shareholders suffer no penalty - no debt, no interest, no cash outflow, no dilution. Tax and accounting are straightforward. Terms are highly flexible.
At initiation, a Cashless Buybacktm eliminates short interest. Firms suffering illiquidity (daily volume below 2% of outstanding shares) will find trading substantially enhanced. Access to equity capital markets is improved.
Cut Treasury Management Expense
Have you measured your cash buyback commission expense? Gone the next step to measure your cash buyback program against VWAP (volume weighted average price) to determine efficiency? Gone one step further to measure performance? Have you considered the changing regulatory and litigation environment surrounding 10b5-1 / 10b-18 buybacks and, for instance, the conflicts with management stock options? A Cashless Buybacktm addresses these concerns to make your treasury strategic cash management program a profit center instead of an expense and liability risk.
We Partner with Your Banking Partners
MG Holdings/SIP does not compete with your existing bankers. Our products are proprietary, and we can architect and execute transactions unassisted. Still, your bankers have earned your confidence. Whoever your bankers may be, we are ready to serve as their advisors if we serve you best by serving them.