Posted by phobos - 13 years ago
Is this the start of a sale to MRVC?
Posted by phobos - 13 years ago
Brilliant find phobos. thanks for posting.
I was just wondering this morning when we would see some movement on the refinance of the debt. Somewhere in the back of my mind I think I remember someone in VTSS management saying they wanted to have it done by fall 2013.
Problem here is VTSS is in a very weak bargaining position. And everyone knows it. All I read in the financial press is how available money is and how everyone is looking for yield. Junk bonds yields are at an all time low. If VTSS can't get it done in this environment things are really bad.
Posted by dlog - 13 years ago
I wish I could say it was more brilliant, but I got it off of Yahoo Finance. I think that ever since Traub and the other new addition to the board were added at the behest of Martin, this has been a possibility. It's kind of amazing how the volume has shot up, but the price is not moving up much. I guess people are waiting to see if this is a good thing (investment from someone like MRVC), or if it is a worst-case scenario where it might be taken private. Although, just getting the share price up to $4.50 will get much of the debt issue to go away by getting the debt to convert. I can't wait to see what happens (?!)
Posted by phobos - 13 years ago
This "find" was actually a recently released SC 13D filing on June 12, 2013.
Columbia Pacific Advisors is listed as holding 3,698,214 shares of Vitesse stock, which is a 9.82% of ownership.
" The reporting persons believe the Common Shares are undervalued and do not adequately reflect the value of the Issuer's business. The reporting persons believe one factor that may be depressing the price of Common Shares is investor concern about significant debt maturities beginning in February 2014 and actions the Issuer may take in order to satisfy these obligations. To this end, the Reporting Persons intend to engage with the Issuer's board of directors to discuss the Issuer's capital structure and may propose refinancing alternatives to the Issuer."
in addition,
" The Reporting Persons believe the Issuer's intellectual property and rapidly growing new products may be more valuable to a strategic buyer than to the public market, even if the refinancing risk is addressed. Therefore, the Reporting Persons will also request that the Board form a special committee, comprised of non-executive directors, to explore a potential sale of the issuer. The Reporting Persons may communicate directly with the Board, this committee, if formed, other shareholders,debt holders, and potential acquirers in connection with the foregoing matters."
this in no-way states that a sale will be definitely occuring in the near future.
Posted by christ3opher - 13 years ago | Updated 13 years ago
True. This is just one of many options being explored. Thanks for the citation.
http://investor.vitesse.com/secfiling.cfm?filingID=1399010-13-10&CIK=880446
PS
I take back the statement about the volume being up, but the price not rising.
Posted by phobos - 13 years ago | Updated 13 years ago
This is horse-pooh. The BH and debtholders control this Board and they are not interested in $4-4.50. That's just about their BE. Koop is way above that. They came to this dance to make a PROFIT. With Sales JUST forecast to begin rising, this is not the time to SELL. It is the time to build a fire under the Board to get the debt taken care of - not at the last minute (or later than that) as usual. There is tons of money available, but VTSS has to payoff the debt to Whitebox before they can pledge the assets against anything. It is time - GET A DEAL DONE!!
Take care of the debt and get the stock price moving north and we don't have to worry about the Pdf stock - it converts and everyone is happy. Selling doesn't make anyone happy.
Perhaps Pacific just wants to move the price up a bit to exit himself. Could be who is selling today.
Satbob
Posted by Satbob - 13 years ago
Satbob,
you are absolutely right that this is NOT the time to SELL.
Posted by christ3opher - 13 years ago
I agree this is not the time to sell; address the debt- nothing will probably come of this except to attract some Mo players and raise the stock price/volume short-term. Gardner is too young to want to exit and I'm sure he knows he has a good thing going.
Posted by Techinvestor - 13 years ago
Garnder and Nuss don't own enough shares yet at a high enough price. I agree, but the idea is mentioned, perhaps as a way to motivate managment's otherwise glacial rate of change. Who knows?
Posted by phobos - 13 years ago
Would rather sell the company, then watch another debt refinance dilution "give the company away" debacle.
Posted by Jeff - 13 years ago
by my simple math - -vtss is worth 3 X revs with no addition for new products or future IP - -
if i use 60MM fully diluted shares (and that is a bit generous) -- $300MM is 3X our last meager qtr -- so that means $5 right now.
the stock has been capped at roughly half the conversion price of $4.50. that is where the market makers feel comfortable -- a 50/50 bet on whether the next round is done at current levels or is dilutive.
meanwhile the convert A was bought by raging billy at $94.50 - recently -- meaning the bond market feels that VTSS is solvent and can pay the 8% note - -and that 8% is a nice rate in this market.
the cap can come off when market players see a future with VTSS over $4.50 and the shares converting before 10/14. if VTSS is able to show revenue gains in the next year or so -- the stock will rise thru the convert mark on its own an no re-fi will be needed. management might feel they have enough information to see that happen - -even though all of us are as worn out as the Boston Bruins after a 3 OT loss in game 1.
a re-fi of $46.5MM is very doable. nearly all the current players could take it on for a similar deal with an extension and maybe lower conversion price and similar interest rate. SatBob is correct that fat andy must have his secured note paid down before any sale or re-fi can be accomplished - -but since he also owns some of the convert A - -the negotiations begin on all debt before any secured note is paid.
our CFO stated that he wanted the debt settled before the end of the year - and i don't really think he stated fiscal or calendar year. we need to hold management to that goal. columbia pacific --the baty boyz and alex washburn - are pushing the issue of value - -buffet says the market is a voting machine until it is a weighing machine. the increase in volume with rising price is further indication of accumulation. the article probably brought us some attention as a ticker listed on the nasdaq - who knew??? VTSS is the worst perfoming ticker on the naz since 2000 - but it is still listed - plenty have bitten the dust. and the 5 prior years put our little POS on the naz annual record gainers list. if the reality proves out that our engine is inside the best cloud servers and base stations in the next upgrade of internet systems, then the little POS will move like a rocket.
i say we top out at $72MM per quarter around 2016.
the baty boyz have added 683,776 shares since their jan. 22, 2013 filing. kopp added, the prescott group took a new position in the 10MM shares sold to needham. and both fat andy and raging billy both added lots of shares.
accumulation takes time in this ticker - -imagine adding those shares off the volume we have seen - -both baty and kopp bidding for shares but not wanting to buy too many at a time - -the market maker dropping price to shake out shares --and most of us too numb to sell anymore - price rising as the slow accumulation continually runs out of market maker inventory.
thank you leRoy kopp for showing us how accumulation is a daily small buy program to pick up what is available - as he detailed all trades in his SEC filing. and there even were small sells to move price to where he wanted to try to buy more lower.
i would add MSCC to the merger mix - - they have combined with vtss to get the MEF 2.0 certification -- and they are a local socal corp that has about 7 times as many employees.
Posted by daWiley1 - 13 years ago
Two quick items:
First, dilution is bad, but there are worse things. Presumably, VTSS would be trading dilution for lower risk and a lower cost of capital going forward. I do not think this is a problem. "Fat Andy" and VTSS could both "win" on this count. VTSS' missing value really resides with former management, which at this point is a sunk cost. It would be nice to get some claw-back, but it does not look as if it will ever happen. Let us move on.
Second, you could explain a lot of the failure in the ability of VTSS to increase its share price being due to the market being somewhat risk-averse toward VTSS after more than a decade of non-performance initiated by a management scandal. However, I think the way in which VTSS has addressed the market and how they are executing makes a compelling story. The more risk tolerant are currently buying shares. The less risk tolerant will wait until the earnings call in August, where I think that not only will new product growth begin to overtake legacy product decline, but also I think that some of the IP revenue that was pushed to the next quarter could generate a startling pop in revenue. At this point, some of the more risk averse could take notice, and the market mechanics of supply and demand could see this thinly traded issue reach $4.50 in no time.
Very little is needed to jump the credibility gap at this point.
Moreover. Wiley's $72M dollar number I think is reasonable. I extrapolated a few months back that if VTSS could generate $500M in revenues (over ten years) in two years, and if they keep generating wealth at that rate, then this is a $250M (revenue) company. My number is a little more conservative at around $63M in quarterly revenues, but still in the ballpark -- not unreasonable.
Posted by phobos - 13 years ago
my conservative calcs come out to a double or more of current revs - -but i add a kicker for several reasons - IP revs will ramp, vtss is winning over 50% of current design bakeoffs, they are designed in significant new customers (csco/meraki - brcm/netLogic), the are in the big 3 chinese corps, alu), revs of new products doubling after 2014 ($60MM to 120MM and then higher).
crg now only talks about to 2014 = $60MM as it is before bond date. 2015 sees a double to $120MM and we are solid gone.
i also think we might see a sale of a division of legacy products or the entire sonet / 3G chips to raise cash -that would propel us over conversion. to me-- listening to Mcder -- i interpret a tuff stance on debt --meaning he said he will solve it this year and he has cash to deal with the first maturity next feb. he is taking his time now to pay down that secured note -but could write the check at any time since the last dilution. i say --my poker read is he has a stronger hand than we suspect - -he will write the check in combination with another card - - and to me - the board and the major owners of shares know this will be solved without more dilution. jmho. how does it help kopp at $8 avg to get more diluted?? same for all the rest.
so i give em a max of $72MM sometime in the out yrs of '16/17 and this new run will last twice that long at least.
whether that execution can be accomplished best as a stand-alone corp or merged inside a larger intestine is a question for the committee. for now - -this corp will not be sold under the conversion price - -i weigh it out to over $6 a share right now.
fwiw and a sad comment - - ol robert chapman (aka Chappie) screamed for vtss to put themselves for sale on eBay at $4.50 -- that price would be $90 today!!!!!!
Posted by daWiley1 - 13 years ago
i tried to edit the last post - but when i push update -- it doesn't go - -so add to first reasons for $72MM top end estimate:
1/2 yr '13 design wins are equal to fy '12.
we are about in the beginning of spring football season --as to where vtss is in the product cycle for 4G-LTE/Advanced.
so the games are set to play in the coming seasons.
vtss is inside.
Posted by daWiley1 - 13 years ago
thanks daWiley.
I agree, why would the original debt holders, in which majority have all continued to average down over the years, want more dilution added to their holdings?
The last two earnings calls, CFO Marty states that: "repayment of indebtedness from sale of legacy assets " are all being considered as solutions to the debt situation.
also, another line of product to be adding significant revenue in the very near future is:
Industrial Ethernet -- which includes, Factory automation, smart grid, automotive etc. there has been over 200 design wins so far, that includes many top companies, including GE,Bosch, Motorola,NEC, etc.
I do not believe that Industrial Ethernet is included in the $500M of projected revenue, because this Industrial segment of Ethernet began in 2013.
Posted by christ3opher - 13 years ago | Updated 13 years ago
Quick question: is VTSS going to address the industrial market by directly making and selling products, are they just going to do it exclusively by selling IP to existing chipmakers, or do we know yet?
Posted by phobos - 13 years ago | Updated 13 years ago
from what I have learned, all I can say is: stay tuned
Posted by christ3opher - 13 years ago
What's going on- stock just went bonkers to $ 2.98 on volume?
Posted by Techinvestor - 13 years ago
I'm wondering if this is tied to AMCC's similar move today ( Both up around 18 % today) ??
Posted by Techinvestor - 13 years ago
From a 13D filed today by Columbia Pacific Fund:
The Columbia Pacific Fund has been approached by an advisor to a well-capitalized North American-headquartered semiconductor designer regarding their interest in acquiring Vitesse for a potentially very substantial premium. The Columbia Pacific Fund understand that the Vitesse Board of Directors has been made aware of the potential acquirer's interest in acquiring Vitesse and the potential premium the acquirer would potentially pay to acquire Vitesse but believe that no formal indication of interest has been communicated to Vitesse. The Columbia Pacific Fund is making this disclosure to avoid trading restrictions while possibly in possession of material, non-public information.
The Columbia Pacific Fund urges the Vitesse board of directors to give prompt, serious consideration to this and any other expressions of interest in acquiring control of the Vitesse.
(Note: filled in the template blanks to make it readable e.g. Issurer = Vitesse)
Posted by 8yrbagholder - 13 years ago | Updated 13 years ago
Previous post, make that: Columbia Pacific Opportunity Fund, L.P.
Posted by 8yrbagholder - 13 years ago
thanks 8yrbagholder, welcome to the board
I am one of many who resemble your name very well.
physical Interest in Vitesse has begun to gain
Posted by christ3opher - 13 years ago | Updated 13 years ago
Absolutely ridiculous to even consider a sale at this point - thank goodness for all the hedge funds that are in this - they are not looking for $5-6, I strongly suspect. Is that a boat on the horizon? Could it be my ship finally coming in? I sure hope it does hit that reef out there!
Anyone watching the "point and figure" charts on this baby? We are talking "breakout" to $4.50 resistance (which is conversion) and the BOOMMMMMMMMMMMM!!!!!!
Satbob
Posted by Satbob - 13 years ago
Absolutely ridiculous to even consider a sale at this point - thank goodness for all the hedge funds that are in this - they are not looking for $5-6, I strongly suspect. Is that a boat on the horizon? Could it be my ship finally coming in? I sure hope it does hit that reef out there!
Anyone watching the "point and figure" charts on this baby? We are talking "breakout" to $4.50 resistance (which is conversion) and THEN BOOMMMMMMMMMMMM!!!!!!
Satbob
PS - Wouldn't let me edit........
Posted by Satbob - 13 years ago
Sorry satbob and others who have experienced the same problem with trying to edit and then having the system deny you access. I am making an effort to find and address the issue.
Posted by dlog - 13 years ago | Updated 13 years ago
Doesn't matter - the important part was the -
BOOMMMMMMMMMMMMMMMMM!!!!!!!!!!!!
Posted by Satbob - 13 years ago
So just to put some numbers on the "potentially very substantial premium." Those, evidently are the words of Columbia Pacific, professional money mangers. They should know what a standard premium is. Their use of the words "very substantial premium" should mean something. But again this is VTSS. But proceeding. A standard acquisition premium is 25-35% over the trading value of the stock. Using $2.30 per share that would mean a acquisition price of $2.87 - $3.10.
In order to be a "very substantial premium" it would have to be north of 35% over trading value. Pick a number. 40% puts you at $3.22 per share, 50% at $3.45 per share. 75%, which would indeed be a very substantial premium would be a price of $4.02 per share. Anything north of that would be a gift and in my opinion would only be paid because the larger holders won't let go of their stock at anything less.
i do have to say this is all conjecture. Columbia Pacific might think a 15% premium is "very substantial." it isn't but they might think it is.
Posted by dlog - 13 years ago | Updated 13 years ago
our shareprice moved up .45 today to close at 2.75. Then afterhours moved up another .03 to settle at 2.78.
volume was a mediocre 647,620 shares
when was the last time Vitesse has had this sort of movement to the upside in one day?
For years and years all we have experienced is down and down and down and down.......
Posted by christ3opher - 13 years ago | Updated 13 years ago
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