Originally Posted by
cargosales
Just reading the press release from Tempus (see post #1) about this ..
Am I being thick or can someone who understands more than I about corporate purchases explain something please. Who exactly is the Seller (presumably MoD?) of these a/c and if that's right, why are they being paid with Tempus shares, not cash?
CS
The seller was ME Aviation Services and the buyer was Tempus Applied Solutions Holding Inc. Tempus is an US Over The Counter (OTC) "Penny Stock" (definition: price less than $5) company - ticker symbol TMPS. OTC stocks are public companies with limited cash resources. They create shares which can be used to purchase assets and to trade publicly.
Since immigrating to the USA, I've self-taught myself to be a top-tier penny stock trader - anyone with national / theatre level ops room experience who can monitor a wide range and enormous volume of screen presented data, spot changes instantly and make mental calculations and decisions rapidly can be very good at it - so I was very interested in this
PR.
Shares are often used to complete acquisitions with the seller getting a discounted price [although that didn't happen in this case]. Then, using a combination of PRs and "other means" [which I won't give away here], stocks get "run up" periodically. Members of the public see the move and buy shares at ever increasing prices propelling the price even higher. Along the way, the recipient of the shares [the seller of the Tristars in this instance] can sell the shares and bank a profit if they wish.
Experienced penny stock traders like me will aim to piggy back this move and then sell before the "sell off" - which can be by stealth on the much higher ask / offer price or dramatic and obvious on the lower bid price. Whoever is still holding the shares when the music stops becomes a "bag holder" and has to wait for the price to go higher than the price they bought at while the aircraft seller and the top traders walk away with a nice profit.
Per the 12 March 2018
PR, the aircraft were acquired for 6.730769 M common shares (ie tradable immediately with no time embargo) at a value of $0.52 per share [so for a notional $3.5M]. The seller only gets $3.5M if they wait for share price to get to $0.52 [or much more if they wait for it to go much higher - which is likely].
Also, per the same
PR, storage costs between the start of negotiations and completion of the purchase after inspections etc were paid for with 833K shares at a share value $0.18 [$150K].
On the day of the
PR, the share price had already been "moved" to $0.1820 and traded 903,379 shares [300 x the previous day's volume] in the range $0.1820 > $0.3799.
On the next day, a further 407,185 shares were traded in the range $0.3499 > $0.177 - so more than enough volume for the seller to offload all 833K shares for considerably more than $0.18 and for penny stock traders to get in on the action as well for up to a 110% profit in minutes / hours.
I saw this move on my scanner but didn't buy in because my area of expertise is in the $0.0001 > $0.0050 range where it is much easier to make greater profits more quickly. However, I did then see the original purchase deal and - noting that the price has never been up to $0.52 - I'm now starting to "scale in" with some small buys around $0.2 as impatient bag holders from 12/13 March sell for a loss.
At some point, the company will obviously be trying to get a USN AAR contract - for instance to support routine AAR requalification sorties - freeing up operational assets to be used on deployments. They already have a 5-year / $25M contract with the USN for EW / threat simulation / target towing using Learjet 35A and Learjet 60.
https://www.tempus-as.com/media-press-release-7.php
Nothing sums up the US penny stock market - for traders and the companies that get their start through it - better than the title of this 80s classic !