Kaiser Group Holdings (KGHI)

Mittal Steel claim appears to be done in arbitration. against the company..

leeds to adjustment in book value by 7 to 8 million in worst case.

so 71 millin in book value left, divided by 1.79 million shares

turns out to be around 39 bucks or so. in value.

of course the stock just sold off from 40 to 34.5..

because all kghi holders expected teh mittal claim to drive the stock from 40 to 50..

so expectations have evidently been disappointed in this arbitration.

the question is does kghi have a case, if this non appealable arbitration went against the.

those who expected kghi to reap a 30 million windfall benefit sure are disappointed that now they have to pay 4 million.

i myself am underwhelmed.

however if this mittal stuff is considered resolved. then kghi becomes a regular liquidation.

with the benefit that the company is an all cash play..

the second largest shareholder has already voiced his desire to proceed with liquidation. will anyone listen to him?

if they are, we soon will know.

teh mittal arbitration gives fresh wind to bennetts claims taht these executives are not as smart as they think. sure enough. why spend 6/7 million in legal fees over the last 3 years, to end up paying 4 millino buck in the end in arbitration award to mittal. bad logic. the whole thing cost shareholder deerly.

so bennett has a claim to say, over, over, move company to liquidation.

if this were done, i would see them making an 33 to 35 buck liquidation distribution. and this could come rather soon. the liquidaiton value could range around 37 to 39 bucks per share.

the stock now trades at discount, because no formal steps have been taken towards a liquidation.
but it looks fairly unlikely that we will see the 45 or 50 liquidation range taht most people expected as a result of successful mittal arbitration.

so this one went against us, and now the best we can hope for is a plain old liquidation to happen in the next 6 montsh. if a liquidation takes 2 years.. the stock will further sleep. now it really has no catalyst to drive the thing further.

with 71 million equity, and 62 millin market cap, the thing i guess is correctly priced, given the uncertainties i what will happen next.

after all it is not difficult for management to destroy 9 million in value by deciding to appeal an arbitration, by pursuing strategic alternetives or other nonsense.

personally i am against using the 71 million in good cash and wasting it on an aquistion unless that aqquisition is a mightily profitable business.

sceptical that kghi has the above average deal flow knocking at their doors though.