Remember Swisher Hygiene (SWSH)? They were a thing once.
A big hospitality services conglomerate that was buying its way to glory, listed on the NASDAQ and TSX, market cap squeaking just over $1 billion, and then it all went to crap.
As often happens with inflationary roll-up plays, Swisher overextended, bought some things it shouldn’t have, and couldn’t make the parts play nicely together.
And so the share price dropped. And dropped. And losses piled up and it dropped again. There was a roll-back, a class action lawsuit, a voluntary TSX delisting, a turfing off the NASDAQ to the OTCQB, a fire sale of assets, and a class action lawsuit settlement.
It’s a classic American corporate failure that once again proves the best way to make $15 million is to start with $1 billion and let dumbass executives do their thing.
This month, the board that oversaw this monumental failure told regulators it’s dropping off the OTCQB and will take it’s sweet ass time liquidating and passing the proceeds back to shareholders some time around 2020. And that was all we were likely to hear from the cigar-chomping Monopoly men that held the keys to the SWSH executive washroom.
Until a new sheriff walked into town.
On April 14, 2016, Swisher announced that its Board of Directors approved the filing on Friday, May 27, 2016 of a Certificate of Dissolution and that under Delaware law, the dissolved corporation would be continued for at least three (3) years to enable the directors to wind up Swisher’s affairs, including the discharge of its liabilities, and to distribute to the stockholders the remaining assets, if any. The announcement indicated that the Board of Directors could not assure holders if or when any such distribution would be made, or the amount of any such distribution, if one is made. The announcement further indicated that after the filing on May 27, 2016, Swisher stockholders will not be able to make any further transactions in the shares of Swisher Common Stock on any recognized exchange.
That’s a news release from Andrew Stranberg, offering $0.98 per share to stockholders.
SWSH stock is at $0.93 currently. It’s likely to get wound up at around $0.88, when the board is done farting about pretending it’s working for shareholders, squeezing the last few grand out over the coming three years.
Stranberg is a New York-based promotions guy who works closely with the hospitality industry. Granted, his work with that industry generally involves putting logos on golfballs and supplying those ‘CompanyCo TeamBuilding Off-Site 2016’ t-shirts you end up using to mop up those accidents the new puppy keeps leaving in the kid’s room, but the fact remains the guy has made so much coin on that business that he’s bought himself a few boats.
No, I’m not talking yachts, I’m talking actual working freighters.
Stranberg has cash. And contacts in the hospitality biz. And has a half notion that he could take that Swisher name and what’s left of their assets and utilize his network to do something profitable with them.
Granted, his 5% top-up is not a humongous premium to the rolling 5-day average. But you’ll be waiting until 2019 to get your hands on any liquidation cash and be unable to trade that stock in the interim because it won’t be listed, like, anywhere.
Swisher has stuff to share around. It sold Savoy Linen for $2.2 million and Gulf Coast Linen for $4m, after which theboard said it would then focus on its core business. Then, of course, it sold its Canadian core business assets for $2.6 million, and its US assets and operations to Ecolab for $40 million, leaving no core business, and who knows what sort of cash to disperse.
And a brand.
Stranberg offers shareholders potential. The board of SWSH are offering them three years of waiting for a cheque, maybe.
Those execs, for their part, have responded to Stranberg’s note, pointing out (correctly) that no offers has actually been tabled yet, just a note saying an offer is coming. They’ve also pointed out Stranberg hasn’t said how he’ll pay for the shares, though presumably “with a big fat cheque, bitch” would be something close to what’s rolling through Stranberg’s head.
We see this in the markets a lot, where a company is failing, sells assets, banks a big cheque and then spends a year plus paying the CEO to figure out what to do with it. All too often, that money is used as some sort of double down and the investor ends up slung into another deal they didn’t ask for, so credit to the SWSH folk for actually returning something to investors.
But when your same investors are looking at a $60.00 to $0.93 haircut over five years, and when you’ve had to pay out $5m because of the class action lawsuit over how you weren’t straight in your dealings with investors, telling them to sweat it out for another three years before they get their piece is beyond the pale. It’s a big middle finger aimed at the little guys who had faith.
It’s America.
Stranberg is also America. A brash, young, brohemian who spends as much time in Munich and Boston as he does in NYC, a guy who has built something tangible with his balls entering the room before his designer shades do. If I was unlucky enough to be sitting on SWSH stock today, I’d be calling down the thunder of hell on the board and demanding they take the man seriously.
Then again, if I owned SWSH stock today, I’d be seriously considering whether I should be left alone in front of a trading platform for fear of the untold damage I might do myself.
–Chris Parry
http://www.twitter.com/chrisparry