As most of you are aware, Premier Exhibitions filed for bankruptcy under Chapter 11 which allows it to reorganize. On Friday it was announced that the Premier Exhibitions Equity Committee had entered into an agreement that “will include the sale all of the Debtors’ assets, including the entire Titanic Artifacts Collection either as assets of the estate or through the sale of RMS Titanic Inc., the company that holds the Titanic Artifacts. The remaining Debtors and their assets likewise would be sold.”
What it means is this: the company can be sold either whole or in parts depending upon the buyers interests. And the Titanic artifacts can be sold either as part of the sale of the whole company or through selling RMS Titanic Inc. The snag that has caused no sale on those artifacts under the salvage award is that they cannot be sold in lots or individually but as the one collection. And the price is simply too high. Under the present circumstances, the price might be lowered and also the possibility the bankruptcy judge might order it sold in lots in order to be sold. Before any of this can move forward, the judge has to agree to a disclosure statement.
Long ago when RMS Titanic Inc was made part of Premier (after some of the original founders of the company were removed and replaced) many thought it would lead to a better valued company. One wonders what really happened here. Titanic became very big after the movie and the centennial of the sinking. Belfast Titanic has done very well and makes money. Either the company was mismanaged and got way over their head or totally miscalculated how to monetize the assets (their exhibitions) to make a profit. Instead of Chapter 11, this is more like Chapter 13 now. The company’s assets are going to be sold in whole or in part to others now. The ghost of George Tulloch is laughing at those that brought this about.
Premier Exhibitions has gone forward with the adversary proceeding against France to attain clear title to the French Collection. Premier tried to get the bankruptcy court to allow the sale arguing they had clear title. However the court found that under federal law, the must first conduct an adversary proceeding. As part of the filing on 17 August, Premier argues they were given clear and unambiguous title. What happens next is that France will have to respond through their American lawyers as to what their position in the matter is. The documents attached to the filing appear to support their claim.
Source: Adversary Proceeding, In Re: RMS Titanic, Inc: U.S. Bankruptcy Court,Middle District Florida, 17 Aug 2016
Premier Exhibitions, the owner of RMS Titanic Inc and operates many touring exhibitions that includes Titanic:The Artifact Exhibition, has filed for Chapter 11 bankruptcy protection. The company states in its press release:
Despite aggressive efforts to manage these issues, the burden of the
Company’s lease in New York City and other legacy business issues remain obstacles to the Company’s ability to conduct business. Faced with these obstacles and upcoming lease payments due, the company has
determined that it would be in the best interest of its stakeholders to
file for reorganization relief under Chapter 11. Operating under the
protection of Chapter 11 will provide the company’s most important
vendors with assurances that they will be paid. Further, the company
intends to create a restructuring plan that should allow Premier to
emerge as a stronger business. Further, as part of its restructuring
efforts, the company will continue to assess the productivity of all
assets, review additional cost-cutting initiatives and explore strategic
alternatives to maximize the value of the business.
Well this is both good and bad news for shareholders. Shareholders have seen the value of their shares fall (and suffered a double bounce as well)considerably. But the voluntary move to reorganize the company in bankruptcy court means it can reduce the liabilities causing it considerable problems. It also means they must open their books up for the court to examine (which will use independent auditors)to determine what the assets and liabilities are. Secured creditors will get paid but how much will be determined by the court.
Of course there is one big asset namely the Titanic Artifact Collection. And the bankruptcy court will now be handling its disposition. Interesting to see how that plays out down the road.
Stock charts are boring to look at unless it is a company you are invested in. And those who have invested in Premier Exhibitions, which owns RMS Titanic Inc and Titanic:The Artifact Exhibition, have to be wondering whether the company is going to survive. Over at FranklinIndependent.com, they took a look at the stock performance and had this to say:
If the $0.45 price target is reached, the company will be worth $270,600 less. Double bottoms are rare but powerful chart patterns. The stock is down 23.31% or $0.152 after the news, hitting $0.5 per share. About 12,100 shares traded hands or 206.25% up from the average. Premier Exhibitions, Inc. (OTCMKTS:PRXI) has declined 40.37% since October 22, 2015 and is downtrending. It has underperformed by 42.63% the S&P500.
Yikes. The market is not liking Premier Exhibitions right now and I bet a lot of shareholders who have seen their stock value drop are not happy either. Patience will not last long for the new company president if they do not see their stocks going up in value soon. Usually it means lawsuits and lawyers with accountants rummaging through documents.
Premier Exhibitions has filed a required Form 8-K with the U.S. Securities and Exchange Commission detailing the loan agreement. The total loan sum is $5m and requires the company take out $1m before 10 Dec 2015. A second draw of $1m is available upon written notice before 18 Dec 2015. And a third draw of $1m can be obtained before 31 Dec 2015. An additional $2m is available but only at the discretion of the lenders. The unpaid amount accrues a 12% annual interest rate and can be prepaid at any time (but requires you pay 105% of principal amount). Yanzi Gao, agent for the lenders, signed the agreement. According to the papers filed with the agency, the names of the lenders are: Jihe Zhang, High Nature Holdings Limited, and Lange Feng. Repayment is required by 1 Aug 2017.
The expected approval of the Dinoking merger with Premier Exhibitions took place on 29 Oct 2015. According to the press release, the merger transaction will take place in the next few days. Upon merger completion, Daoping Bao will be appointed the president and chief executive officer of the company. Some shareholders have expressed the hope that Bao will fix the problems caused by poor management of the company.
Premier Exhibitions, which owns RMS TItanic Inc and Titanic:The Artifact Exhibition, has reported its second quarter 2016 results. Here is some information from that statement:
Gross profit decreased to $1.1 million from $3.0 million in last year’s second fiscal quarter while gross margins fell to 16.1% from 36.5% in the prior year period. The decrease in gross profit is primarily due to the decrease in revenues and an increase in production and marketing expenses related to our New York City location.
Total exhibition days decreased 28.4% to 1,076 as compared to 1,503 in the second fiscal quarter of 2015.
Average attendance per exhibition day decreased 26.7% to 366 compared to 499 in last year’s second fiscal quarter. Average ticket prices for semi-permanent and partner presented exhibitions decreased 4.1% to $16.10 from $16.79 in the second quarter of fiscal 2015.
Average attendance per exhibition day for semi-permanent exhibitions was 319 compared to 344 in the prior year period. Average ticket prices for semi-permanent exhibitions increased 3.7% to $22.20 from $21.40 in the second quarter of fiscal 2015.
Company president Michael Little stated that they need additional financing to keep going. “We have a working capital deficit of $1.4 million excluding the convertible debt of $13.5 million, which is included in the short term portion of note payable on the balance sheet.” Which is why they desperately want to merge with Dinoking (proxies have been mailed out for the special 29 Oct 15 meeting).
Little argues the merger will allow them to get additional capital ($5m) to fund ongoing operations and to have the company “break-even” in its operations. Otherwise he warns:
If we are unable to obtain additional financing, we will likely not be able to continue operations as they are currently anticipated or at all.
Of course there is that lawsuit out there by Mark Sellers to enforce the previous merger agreement, which could throw all plans out the window if it survives early judicial review.
Premier Exhibitions, the owner of RMS Titanic Inc and Titanic:The Artifact Exhibition, had a sudden stock drop this week. The company in an official statement says:
With regard to the recent decline in our stock price, Premier Exhibitions, Inc. (Nasdaq:PRXI) knows of no specific reason for the decline. As previously announced, the board is currently exploring all strategic and financing options. The board is currently in advanced discussions with a potential strategic partner and is considering several other financing alternatives. We expect to have more news to report in the near future.
Now it could be just a general drift of the market but this is a niche stock, one that is not traded on the big boards. The big problem the company has is that, aside from monetizing the Titanic artifacts, it has been unable to sell the collection to another buyer. The strict conditions imposed by a federal judge means the entire collection gets sold at one time. It cannot be sold in sets or individual lots. The high sale price means only the most wealthy of investors or institutions can afford to purchase. And even if a bid is finally accepted by Premier, then you head off to federal court to have the judge sign off on it. And that will not be easy. The judge will demand lots of proof you are going to maintain the collection. And the hearing will be public. Expect anti-salvors to show up to protest the sale. Not to mention petitions that seek to reopen the salvage award.
Or another reason could be the decision to have a 1 for 10 reverse stock spilt. Normally a stock split gives you stock (for every ten shares you own we give you two). Reverse stock splits are not unheard of but unusual. It is cheaper than a stock buy-back but means investors loose shares. Say you have 100 shares in Premier. Every 10 shares will be converted to 1 share. So instead of 100 shares, it gets cut to 50. In theory, by reducing the number of shares held by investors it increases the market value. Premier had 49.1 million shares before the deadline of 27 Feb 2015. Now thanks to the reverse stock split, it now has 4.9 million shares thus increasing its market value. And its ability to keep the stock price above a certain threshold ($1.00)to be publicly traded as well perhaps bettering the chances for financing.
Investors ought to be worried. They cannot sell the Titanic collection, a major deal to sell shares to another entity fell through, and there seems to be a sense that something is not going right at Premier. Taking back shares is a desperate gamble to keep the stock from sinking below $1.00. As of today, the stock is trading at $3.02. So it seems to have worked but still the stock is more trending down than up. Investors are right to be wary about this stock and perhaps take their cash out when it gets high enough to make some money. But more likely it is a loss on the tax form.
Premier Exhibitions, which owns artifacts salvaged from RMS Titanic and operates a touring artifact exhibition, had a interesting filing with the U.S. Securities and Exchange (SEC) Commission. It announced in its 25 Nov 13D filing that current chairman Mark Sellers deal to sell his 31% share interest to Armada Group GP Inc has been canceled. The terms of the deal required that changes in the board of directors would have to take place and two would have to be independent. Since the deal is now cancelled, those changes are also voided. No word as to what happened but the filing states Sellers concluded Armada Group would not fulfill the obligations required. The filing also opens the possibility of legal action against Armada for not meeting its obligations.
What does this all mean? Speculation is the deal fell through because of some other deal that was tied to it. But that of course is just speculation. An an early deal to sell the artifacts fell through so they are trying to find ways to either sell the collection or a new way to monetize it. Shares of the company fell to 64 cents on the news.
NASDAQ recently sent a letter of non-compliance to Premier Exhibitions (NASDAQ:PRXI) regarding the recent director resignations. Specifically they are out of compliance with the audit committee requirements which require the audit committee be comprised of three independent directors. They have to resolve it either at the next annual shareholder’s meeting or by 27 Aug 2015. However if the annual shareholders meeting is held before 23 Feb 2015, then they must show compliance on that date. Four directors resigned on 25 Aug 2014 and were replaced by Jack H. Jacobs and Rick Kraniak on the same day.