Well, after one whole year the day has finally arrived. Bad Toys is really finally going to trade x-Southland dividend on February 2nd.
Here’s what this means to shareholders: If you own BTYH at the close of market on Thursday, February 1st, you will receive a dividend of just under one share of Southland for every share of BTYH you own when the market opens on February 2nd. Therefore, let’s say you own 5,000 shares of BTYH on February 1st. You will receive, in the mail, a certificate for about 5,000 shares of Southland Health Services, Inc.
The stock certificate you receive in Southland will be in free trading shares. Here’s what I don’t know- when Southland will open for trading, at what price, and on what exchange.
Then, if you so choose, you have the option of selling your shares of BTYH in the open market anytime after February 2nd. If you choose to do so, you will still receive your dividend in Southland shares.
MarketByte LLC, the publisher of the OTC Journal, currently owns 150,000 shares of BTYH which are restricted, but eligible to be free trading under Rule 144. I will not be selling any of those shares prior to February 2nd because I want the Southland dividend for all of them. However, I might sell some starting February 2nd if BTYH trades at a reasonable level.
I would expect BTYH to open considerably lower on February 2nd. After all, the company is dividending out 75% of its value to shareholders, so in theory when it trades x-dividend it should open 75% lower.
I will publish a comprehensive update early next week so everyone has a couple of days to make up their mind on how they want to proceed.
In short, if you are going to hold your BTYH for the dividend, you are taking the leap of faith that Southland can open and trade at a much higher level on a stand alone basis. On paper, it should be able to happen.
If you are concerned about the loss of value in the BTYH shares, and aren’t willing to be on the future value of Southland on a stand alone basis, sell your shares of BTYH on or before February 1st. It will be worth a lot less on February 2nd.
I don’t know how long it will take for Southland to open and trade on its own. However, I personally believe it will take 2 months at the minimum, and probably longer.
Here’s the current chart:
BTYH has been in much better shape since this never ending regulatory process finally moved in a positive direction with effective registration of Southland and now the NASDAQ finally allowing for the x-dividend date.
However, the stock has not headed to its previously lofty level of $2.50. Over the past year the stock drifted down to $.50 as the company slowly ground through the SEC.
One year later we have some progress, but the stock is now only around $1 despite the $50 million plus in annual revs and consistent quarterly profits.
The market is simply telling the company their spin out story is less believable after the year’s wait. Nevertheless, the story is the same as it was a year ago.
I believe this is one of the most interesting special situations I have ever seen, and it is going to be very exciting to watch it play out. On paper, it all makes sense. If CEO Lunan pulls this off, you will wish you owned a lot more in the $1 range.