Telescope Reviews: D-day for Meade: February 2, 2009

First, we should remember that Meade is controlled by a company (Paul Sonkin's Hummingbird Fund) that specializes in buying undervalued companies (like when they bought Meade) and extracting the value out of them (Paul Sonkin co-authored a book on this). That is the primary objective of the controlling shareholders at this point.

Nahh, the IRS won't care. They would only care if the assets were being sucked out for personal use and not reported as income. It won't work that way. Once Meade is de-listed, they can go private for a song (though they could be before de-listing, now). At that point the remaining assets can be liquidated through private sales (and probably at a profit since they can shop around and won't be encumbered by registration restrictions and loan covenants). The returns from the sales will go into what remains of the company (which will more resemble a holding company). The remaining owners can then take out fees (which they probably already are), salaries, bonuses, commissions, loans, dividends (not the greatest way to take out cash) and parcel out the assets through other companies.

I think Meade will probably go private and can do so quite easily, especially once they are de-listed (though that may not be necessary, as I said, that is only interesting). The board is already controlled by the majority owners, so that isn't an issue. Their market cap is ~$8 million with little or no volume, and the major owners hold ~30% of that, so the remaining interests could be purchased for a nominal cost. Bankruptcy won't be necessary since there really isn't a bankrupt situation.

This parceling out of Meade has been going on now for nearly two years. There have been plenty of SEC filings disclosing this and the accumulation of stock by a few owners. With this transparency, there shouldn't be much of any legal push-back on this. The folks at Hummingbird (primarily Paul Sonkin) specialize buying undervalued companies and getting a return value out of them. However they end up doing it, I am sure it will be creative and done with a patient tenacity (which what has been going on over the past several months anyhow).

In the short, they bought low (when Meade's market cap went below their book value) and by selling it out piece by piece, they will get a premium back. This is one of several companies that they are doing this with. In the end, like I said before, de-listing is only interesting... they are on a different agenda.

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Bic Parker
17.5" f/5 dob
10" f/10 SCT
5" f/8 refractor
80mm f/6 refractor
66mm f/6 refractor
Plus a few others out of the rotation

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