Rolling On To Better Things. Heely’s Nixes Liquidation Deal to Hook Up With Another Company To Live On. But, Is There More or Less Value in the New Deal?

 

Heely’s, Inc. created quite stir a few years ago with those sneakers that included wheels that popped out of the heel to turn them into little roller skates.  You may have seen some of the ne’er-do-wells at the local shopping mall torment you by rolling by quickly in a blur of hair gel and piercings.

Heely’s went public at the end of 2006 at $21/share on the upswing of the fad and before the market collapses that began in 2007.  Stock prices approached $40/share shortly thereafter but succumbed to the gravity of the low single digits, where it has languished ever since.

In October, Heely’s agreed to be acquired and liquidated by Evergreen Group Ventures for $13.9 million.

Today, Heely’s announced that it found a superior proposal to be acquired by Sequential Brands Group for about $63.2 million, or $2.25 per share, in cash.  Sequential will also have to pay a termination fee to EvergreenSequential is a “licensing and brand management” company whose brands include William Rast, People’s Liberation and DVS.

Also, according to their last 10-Q, Sequential had about almost $6 million in cash and $13.4 million in total assets.  It announced a financing commitment for about $8 million for cash contributions to the merger vehicle, but that leaves a big gap for the rest of the purchase price, which I would expect to see discussed in a proxy statement seeking approval of the transaction.

What is interesting is the fact that Heely’s had about $30 million in commercial paper, corporate bonds and municipal bonds and about $28.2 million in cash against total liabilities of about $6 million as of its last 10-Q.  In other words, without taking into account its non-cash and non-securities assets, the Evergreen deal had about $66.1 million in value to be distributed to shareholders, or about $2.40/share.

This is back-of-the-envelope type of figuring that isn’t scientific or run through fancy computer models.  There may be more hair on the deal than appears at first glance, but expenses of winding down and liquidation of about $0.15/share seems steep.  I’m sure there will be more details to come.


Totally relevant and fair use use of the Adele “Rolling in the Deep” video and quite awesome song, no matter what style of music you like.
Rolling. Get it?

Links:

Heely’s Form 8-K (Sequential)
Heely’s Form 8-K (Evergreen)
Heely’s Form 10-Q
Sequential Form 10-Q

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