Deep Value Ignored, Enhanced from Active Restructuring (Updated for Name Change)

Imation (IMN) now (02/22/17) trades as GLA (GlassBridge Enterprises) with a 1 to 10 reverse split.  The valuation is a fast moving target. So, making an accurate value assessment is painful. Furthermore, recent opaque restructuring events and earnings call commentary on discontinued operation's disputed liabilities is unclear. Note the stock moved 25% from Wednesday's (02/15/17) price of $0.62 (IMN) /($6.20 as GLA). This price change increases short term risk.

Background story:

Imation (IMN) was formerly a data storage technology company. This horribly mismanaged company is the target of Clinton Group’s activism since 2015. Clinton successfully forced Board and management changes. Three directors replaced at the 2015 annual meeting, CEO resignation Q3 2015.In addition, executive bonuses frozen, board compensation reduced and every business line reviewed for profitability and capital requirements. Lastly, a complete analysis of strategic options. 

The next activist step during 2015, sale of non-core assets (IronKey, HQ real estate, Memorex trademarks). Decrease cash burn, manage cash/equity investments and strengthen the remaining business line Nexsan. Finally, January 2017 Imation (IMN) agrees with Clinton Group to fast track change to a publicly traded asset management firm. An established investment advisor will manage third party capital following the closing transaction with Clinton Group.

On 02/10/17 Imation (IMN) announced it will change its name to GlassBridge Enterprises (GLA) and execute a 1:10 reverse stock split. This event concludes the strategic transition of the Company's business activities to become a publicly-traded alternative asset manager with the Clinton Group.

The growth plan includes hiring experienced investment teams, analyze joint venture opportunities and/or acquisitions.

Current Valuation per Seeking Alpha as of 02/17/17: Note this is before 02/22/17 1 for 10 reverse stock split and name change from IMN to GLA.

Market Cap:  29.01M ,Enterprise Value:  -26.13M
Gross Profit (ttm):   39.21 , EBITDA:  -14.51M
Total Cash (mrq)  49.60M , Total Cash Per Share (mrq) 1.34
Total Debt (mrq) :   0
Quick Ratio (mrq) :  1.20 , Book Value Per Share (mrq):  -0.08
52-Week Change :  -2.61%
52 Week High: 1.81 , 52 Week Low: 0.47
Shares Outstanding:  37.24M , Float:   21.87M
% Held by Insiders:  41.58% , % Held by Institutions:  70.83%
Shares Short 2.42M , Short % of Float   11.08%

In an effort to understand the current financial position I started with the most recent 10Q from 11/06/16. Then these balance sheet amounts were adjusted based on management commentary during the Q3 2016 earnings call. Finally adjusted further based on the 8Ks reported after Q3 (01/17 and 02/17).

Review of 3rd quarter balance sheet, commentary and subsequent Q3 8K restructuring events. 

Below starting column 2(labeled "10Q BS on 11/10/16 per SEC")  is the Q3  balance sheet per SEC10Q.

Column 3 (labeled “Q3 Adj Per Earnings Call”) includes Management’s commentary on other liabilities, restricted cash, AR.

"current asset of $15.3 million primarily consist of $10.8 million of restricted cash which was associated with the certain disputed trade payables related with two venders and $1.8 million of receivables. Other current liabilities of $37.9 million included $28.7 million accounts payable. We are disputing approximately $26.8 million of trade payables. The remaining liabilities were primarily related to customer rebate and credit which might or might not require cash settlement." adjustments made under column 3 (labeled "Q3 Adj per earnings call")

Column 4 (“Total After Q3 Commentary Adj”) is the summary of Column 2 and 3. 

The actual cash liability will have a significant impact on the current 29M market value. The impact of discontinued operation's liability is still less than certain
The following are 8K events released after Q3 are shown under column 4 on the last two rows after the line item “Total Equity per Share”  and before "Total Equity per share after Nexsan Transaction (estimate)". 

8K details are below. But to summarize the 8K events,Nexsan stock exchanged with Spear Point capital for a 25 million secured convertible note. And, 50% of the shares in Nexsan to be held and future capital and R&D requirements responsible by Spear Point. This exchange permits upside gains with Nexsan stock and frees requirement to fund Nexsan growth or capital expenditures. Lastly, it reports the name change from IMN to GLA and the 1 for 10 reverse split. See details and links below

8K: 01/27/17: "Stock sale of Nexsan Corporation ("Nexsan") to NXSN Acquisition Corp an affiliate of Spear Point Capital. IMN (GLA) received a senior secured convertible promissory note issued by NXSN in an initial aggregate principal amount of $25 million, subject to certain adjustments (the "Note"), and (ii) 50% of the issued and outstanding shares of common stock of NXSN (the "NXSN Shares"). The remaining 50% of the issued and outstanding shares of NXSN common stock is owned by Spear Point Private Equity LP ("SPPE")." http://bit.ly/2mdvhz2

8k 02/03/17: " entered into a Capacity and Services Agreement with Clinton and GlassBridge Asset Management, LLC ("GlassBridge"), our investment adviser subsidiary. As consideration for the capacity and services Clinton has agreed to  to issue 12,500,000 shares of Common Stock to Madison Avenue Capital Holdings, Inc. ("Madison"), an affiliate of Clinton, on the Initial Closing Date".

8k 02/10/17: "approved a 1:10 reverse stock split . We also announced that we will change the name of the Company to "GlassBridge Enterprises, Inc." http://bit.ly/2mdfdxi

Balance sheet Q3 + adjustments for earnings call comments + 8k events.



Long GLA