UPDATE 5/30-1100EDT: PNSN now trading at 0.20/share with no volume to speak of.
FORM 8k Filing 29-May-2012 - Entry into a Material Definitive Agreement, Costs Associated with Exit… On May 28, 2012, Penson Financial Services, Inc. (“PFSI”), the U.S. broker-dealer subsidiary of Penson Worldwide Inc. (the “Company” or “we”), entered into an Asset Purchase Agreement (the “APA”) with Knight Execution & Clearing Services LLC, a Delaware limited liability company (the “Purchaser”), pursuant to which the (i) Company will sell certain assets of PFSI’s futures clearing business (the “FCM Business”), including but not limited to, customer contracts, segregated customer account assets, assets relating to the foreign currency exchange business, membership seats and licenses for clearing exchanges, and other related assets to the Purchaser; and (ii) the Purchaser will assume, subject to specified exceptions, certain liabilities and obligations under customer contracts in the FCM Business (the “Sale”).
In consideration for the Sale, the Purchaser agreed to make an initial payment of $5.0 million in cash to PFSI (the “Initial Purchase Price”). A portion of the Initial Purchase Price will be held back in respect of any exchange membership and other assets that are not transferred at the Closing, provided that such holdback shall not reduce the amount paid at closing to less than $2.5 million. At this time, the Company is not able in good faith to estimate (i) the total amount or range of amounts of costs expected to be incurred in connection with the Sale, or (ii) the total amount or range of amounts of the charge that will result in future cash expenditures, if any, that might be required in connection with the Sale.
In short, PNSN is functionally bankrupt, but will do everything it can to delay the public bankruptcy filing, so that it can keep the clock running towards fulfilling statutory time limitations which will prevent court-ordered reversal of certain payments (a.k.a. claw-backs) including bonuses and commissions paid to officers and employees of the company, external payments to vendors and partners, and perhaps ‘special dividends’ or other payments made to preferred investors. Plainly stated, the money they are spending now is the ‘good money’ spent to buy time, so that the ‘bad money’, i.e. preferential payments to some entities, will not be re-assessed by the court. Hence the term, “throwing good money after bad.”
UPDATE 5/24-1500EDT: PNSN now trading at 0.30/share with extremely low volume, and many shares offered that are not receiving bids. High volume this morning at 0.31/share indicate that all of the institutional investors are now off the boat, clearing the way for a bankruptcy filing.
UPDATE: 5/22-1000EDT: Here it is, folks – PNSN failed to satisfy its restructuring agreement, and that news is now public with the Form 8-K filed yesterday (see below). The only money they have left is customer money, which they just “loaned” from their Broker/Dealer division to their back-end brokerage division for continued operations: they are “continuing their efforts complete strategic transactions” - to pay out to clients who have trades in play…in other words, “we’re doing our best, but no guarantees, Mr. Customer.” This is the ‘Lit Fuse’ on the next financial bomb to go off here in the US.
Penson Worldwide, Inc. [PNSN], Form 8-K, 21-May-2012 (biz.yahoo.com)
Entry into a Material Definitive Agreement, Termination of a Material Definitive Agreement
(i) the holders of a majority of its Senior Second Lien Notes, (ii) the holders of over 70% of its unsecured 8% Senior Convertible Notes due 2014, and
(iii) Broadridge Financial Solutions, Inc., which set forth the terms of a proposed exchange offer to restructure the Company’s outstanding indebtedness. On May 17, 2012, the RSA was terminated automatically pursuant to its terms as the Company did not launch the proposed exchange offer as contemplated under the RSA. Nonetheless, the Company intends to recommence negotiations with its debt holders to seek alternative means to restructure the terms of its outstanding indebtedness. See the discussions under the headings “Liquidity and Capital Resources” and “Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2012 for a more complete description of the related risks associated with the foregoing.As of today’s market open, bids on PNSN are at 0.376 and falling…
Just in case you haven’t been paying attention, the US Financial Implosion continues. PNSN, which was an $18 stock when the economic bomb fell in 2008, is now trading for under $0.40 – yes, under 40 cents! They may file bankruptcy at any moment…and when they do, millions more of segregated custodial funds (customer deposits, not invested funds) will again vanish, stolen by the cronies and facilitated by the courts.
JUST LIKE MF GLOBAL.
THE REPUBLIC IS DEAD. THERE IS NO MORE RULE OF LAW. THERE ARE NO “SAFE HAVENS” LEFT. Get out of all markets before you lose everything… you don’t have long!