180 Degree Capital Corp. Reports Q1 2020 Results and Developments From Q2 2020
May 05 2020 - 4:05PM
180 Degree Capital Corp. (NASDAQ:TURN) (“180” and the “Company”),
today reported its financial results as of March 31, 2020, that one
of 180’s life science privately held portfolio companies has
entered into a definitive agreement to be acquired by an
undisclosed party, and additional developments from the second
quarter of 2020. The Company also published a letter to
shareholders that can be viewed at
https://ir.180degreecapital.com/financial-results.
“While the first quarter was challenging amidst
the backdrop of the COVID-19 pandemic, we are excited to share some
material developments in Q2 2020 with our shareholders,” said Kevin
M. Rendino, Chief Executive Officer of 180. “The closing of the
sale of one of our privately held life science portfolio companies
will be a very meaningful event for TURN and its shareholders.
Following the close, the combination of the upfront payment, the
escrow, and the fair value of the potential future milestone
payments will have a material and positive impact on net asset
value per share in the second quarter of 2020. We are also excited
to have been selected by a pension fund to manage $25 million of
capital alongside 180’s permanent capital. This announcement marks
our first big win in our efforts to manage additional capital, but
we are determined to not have it be our last. We will continue to
build our asset base for those that want to invest in our strategy.
In addition to these two material events, our public portfolio
rebounded in April 2020 from a tough Q1 2020, rising in value by
18.9%. Q2 2020 at 180 is off to a sensational start.”
Review of Q1 2020
|
Q1 2020 |
Stock Price |
$2.15 -> $1.3582 (-36.8%) |
Net Asset Value per Share (“NAV”) |
$3.06 -> $2.12 (-30.7%) |
Stock Price / NAV |
70% -> 64% |
Cash + Liquid Securities* |
$51.2 million -> $32.4 million (-36.7%) |
*Net of unsettled trades as of the end of the
period.
- During Q1 2020:° Public portfolio gross total return was
-30.8% versus the Russell Microcap Index of -32.0%. Public
portfolio decreased in value by approximately $15.8 million, or
$0.51 per share.° Private portfolio declined in value by
approximately $12.9 million, or $0.42 per share.
Acquisition of Life Science Private
Portfolio Company
- On April 30, 2020, one of our life
science private portfolio companies entered into a definitive
agreement to be acquired by an undisclosed party. The transaction
is currently expected to close in mid-to-late May 2020. The terms
of the acquisition are confidential. 180 notes, however, that upon
closing, it will receive approximately $4.4 million in cash for its
position in the company. Approximately $400,000 in additional
proceeds will be held in escrow for one year. 180 will also be
eligible to receive up to approximately $81 million in potential
future payments upon the achievement of undisclosed development and
commercial milestones. 180 currently estimates that the first
milestone payment could occur in 2-3 years, and subsequent
milestone payments could occur at various points over the
subsequent 10-15 years. The timing and likelihood of the acquirer
achieving these milestones is highly uncertain and if these
milestones are achieved, the timing may be materially different
than current estimates. These factors will be used to develop a
fair market value based on a probability-weighted net present value
analysis of the potential future milestone payments as of 180's
next valuation date, which is June 30, 2020. In addition,
simultaneous with the close of the transaction, the company will
spin out certain assets into a new entity. 180 will own shares of
this new entity. 180’s securities of this privately held life
science portfolio company were fair valued as of March 31, 2020, at
approximately $2.2 million.
Additional Q2 2020
Developments
- In April 2020, 180 was selected by
a pension fund to manage $25 million in a separately managed
account. This selection is subject to negotiation and execution of
a definitive investment advisory agreement and the effectiveness of
180’s registration as a Registered Investment Adviser with the
Securities and Exchange Commission. 180 currently expects to
complete these steps and begin management of the funds in
mid-to-late Q2 2020.
- Public portfolio gross total return
in April 2020 was +18.9%, increasing in value by $6.1 million, or
$0.20/share. The Russell Microcap Index total return during April
2020 was +15.2%.
The Company also published a letter to
shareholders that can be viewed at
https://ir.180degreecapital.com/financial-results.
Mr. Rendino and Daniel Wolfe, President, Chief
Financial Officer and Portfolio Manager, will host a conference
call tomorrow, Wednesday, May 6, 2020, at 9am Eastern Time, to
discuss the results from Q1 2020 and the developments during Q2
2020. The call can be accessed by phone at (712) 770-4598 passcode
415049 or via the web at
https://www.freeconferencecall.com/wall/180degreecapital.
Additionally, slides that will be referred to during the
presentation can be found on 180’s investor relations website at
https://ir.180degreecapital.com/ir-calendar.
About 180 Degree Capital
Corp.
180 Degree Capital Corp. is a publicly traded
registered closed-end fund focused on investing in and providing
value-added assistance through constructive activism to what we
believe are substantially undervalued small, publicly traded
companies that have potential for significant turnarounds. Our goal
is that the result of our constructive activism leads to a reversal
in direction for the share price of these investee companies, i.e.,
a 180-degree turn. Detailed information about 180 and its holdings
can be found on its website at www.180degreecapital.com.
Press Contact:Daniel B. Wolfe180 Degree Capital
Corp.973-746-4500
Forward-Looking Statements
This press release may contain statements of a
forward-looking nature relating to future events. These
forward-looking statements are subject to the inherent
uncertainties in predicting future results and conditions. These
statements reflect the Company's current beliefs, and a number of
important factors could cause actual results to differ materially
from those expressed in this press release. Please see the
Company's securities filings filed with the Securities and Exchange
Commission for a more detailed discussion of the risks and
uncertainties associated with the Company's business and other
significant factors that could affect the Company's actual results.
Except as otherwise required by Federal securities laws, the
Company undertakes no obligation to update or revise these
forward-looking statements to reflect new events or uncertainties.
The reference and link to the website www.180degreecapital.com has
been provided as a convenience, and the information contained on
such website is not incorporated by reference into this press
release. 180 is not responsible for the contents of third-party
websites.
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