Astrotech Corp (ASTC) (~$24MM market cap) is an odd little microcap that IPO’d in 1995 as an aerospace firm dubbed SPACEHUB, nonetheless, when the U.S. wound down the manned house program the corporate offered most of their operations to Lockheed and pivoted to “mass spectrometry know-how” (do not ask me what this implies) within the mid-2000s. Astrotech has struggled to discover a use case for his or her know-how, they’re presently pursuing testing for explosives in journey settings, cannibas trade functions and viral/COVID testing, all whereas producing minimal income prior to now half decade. The one factor they’ve offered loads of is inventory, throughout the mania of 2020-2021, Astrotech offered $79.4MM in fairness in a sequence of capital raises. As of three/31, they solely have $44.1MM of money remaining and no debt, making it a net-net, albeit a low high quality money burning one. If there was any doubt of administration’s lack of capital allocation expertise, Astrotech introduced a new ATM fairness program earlier this month regardless of shares buying and selling at an excessive low cost to internet money.
Earlier this week, BML Funding Companions (good agency to look at, typically concerned in a number of these damaged biotechs and different internet nets) re-entered the image by amending their 13D to incorporate a suggestion to purchase the shares they do not personal (presently personal 13.1%) for $17.25/share. Within the exhibit, they included a quick letter beneath:
The CEO, Thomas Pickens III, owns 8.3% of the corporate (administration has an entire owns 9.7%), he pays himself handsomely, some $1.2MM in 2022 which included a $450k wage and $375k money bonus, added collectively that is slightly below the $869k in income the corporate did throughout the identical timeframe. So at first look, I did not like BML’s possibilities of convincing the board to take their provide.
However an fascinating factor occurred yesterday afternoon, a day after receiving BML’s provide, the corporate did certainly cancel their ATM program, which is a stipulation of the deal. Why do this in the event that they weren’t critical about evaluating the provide? Particularly for the reason that shares spiked up, making it extra enticing to execute the ATM if that is the trail they needed to take. That motion alone is value a small place for me. BML did put a surprisingly tight timeframe on a response, however hopefully the corporate has already met that threshold by cancelling the ATM and acknowledging the provide in an 8-Okay. From my reminiscence, I do not keep in mind BML shopping for an organization outright, however they’re skilled in liquidation eventualities and have possible helped corporations execute them behind the scenes. This does not appear to be a stretch for them and there isn’t any financing situation.
Shares presently commerce for $14 or roughly a 20% low cost to the provide worth.
Disclosure: I personal shares of ASTC