Monday, February 20

Ignored Deep Value, Enhanced from Active Restructuring

Imation (IMN) valuation is a fast moving target. So, making a value assessment is painful. Furthermore, recent opaque restructuring events and earning call commentary on discontinued operations disputed liabilities is unclear. Note the stock 25% move from Wednesday (02/15/17) price of $0.62 increases short term risk.

Background story:

Imation (IMN) formerly a data storage focused technology company has been the target of Clinton Group’s activism since 2015. Clinton forced Board / management changes, 3 directors replaced at 2015 annual meeting. CEO resignation Q3 2015.Executive bonuses frozen, board compensation reduced and every business line reviewed for profitability and capital requirements. Also, analysis of strategic options.

The next step during 2015, sale of non-core assets (IronKey, HQ real estate, Memorex trademarks). Decrease cash burn and manage cash/ equity investments, strengthen Nexsan. January 2017 Imation agrees with Clinton Group to fast track change to an asset management business by creating a publicly traded asset management firm.  An established investment advisor will manage third party capital following the transaction’s closing with Clinton Group.

Now, 02/10/17 Imation (IMN) announced that it will change its name to GlassBridge Enterprises. This event concludes the strategic transition of the Company's business activities to become a publicly-traded alternative asset manager with Clinton Group.

“A 1:10 reverse stock split of IMN. The name change and the reverse stock split will both be effective Tuesday, February 21, 2017.  New ticker symbol from "IMN" to "GLA", to take effect following the effectiveness of the name change and the reverse stock split.”

The growth plan is to hire experienced investment teams, analyze joint venture opportunities and/or acquisitions.

Current Valuation per Seeking Alpha as of 02/17/17
Market Cap:  29.01M ,Enterprise Value:  -26.13M
Gross Profit (ttm):   39.21 , EBITDA:  -14.51M
Total Cash (mrq)  49.60M , Total Cash Per Share (mrq) 1.34
Total Debt (mrq) :   0
Quick Ratio (mrq) :  1.20 , Book Value Per Share (mrq):  -0.08
52-Week Change :  -2.61%
52 Week High: 1.81 , 52 Week Low: 0.47
Shares Outstanding:  37.24M , Float:   21.87M
% Held by Insiders:  41.58% , % Held by Institutions:  70.83%
Shares Short 2.42M , Short % of Float   11.08%

 Review of 3rd quarter balance sheet, commentary and subsequent Q3 8K restructuring events.
Below starting column 2(labeled "Current")  is the Q3  balance sheet per SEC. Management discussed during the Q3 earnings call other liabilities. Short term other liabilities are 56.20M , long term other liabilities 34.60M.  Specific comments made during the Q3 earnings call.  
"current asset of $15.3 million primarily consist of $10.8 million of restricted cash which was associated with the certain disputed trade payables related with two venders and $1.8 million of receivables. Other current liabilities of $37.9 million included $28.7 million accounts payable. We are disputing approximately $26.8 million of trade payables.The remaining liabilities were primarily related to customer rebate and credit which might or might not require cash settlement." adjustments made under column 3 (labeled "Q3 Adj per earnings call")

The actual cash liability will have a significant impact on the current 29M market value. Impact of discontinued operation's liability is still less than certain  

The following are 8K events released after Q3 (reported on 11/08/16). Shown under column 4 last two rows before "Total equity per share after Nexsan adjustment ...".

8K: 01/27/17: "Stock sale of Nexsan Corporation ("Nexsan") to NXSN Acquisition Corp an affiliate of Spear Point Capital. IMN (GLA) received a senior secured convertible promissory note issued by NXSN in an initial aggregate principal amount of $25 million, subject to certain adjustments (the "Note"), and (ii) 50% of the issued and outstanding shares of common stock of NXSN (the "NXSN Shares"). The remaining 50% of the issued and outstanding shares of NXSN common stock is owned by Spear Point Private Equity LP ("SPPE")."

8k 02/03/17: " entered into a Capacity and Services Agreement with Clinton and GlassBridge Asset Management, LLC ("GlassBridge"), our investment adviser subsidiary. As consideration for the capacity and services Clinton has agreed to  to issue 12,500,000 shares of Common Stock to Madison Avenue Capital Holdings, Inc. ("Madison"), an affiliate of Clinton, on the Initial Closing Date".

8k 02/10/17: "approved a 1:10 reverse stock split . We also announced that we will change the name of the Company to "GlassBridge Enterprises, Inc."

Balance sheet Q3 + adjustments for earnings call comments + 8k events.

Insider activity:

Value Institution ownership (note John Rogers' Ariel at 21.61% of TSO)

Long IMN (GLA)