Kaiser Group Reports First Quarter 2011 Results and Investment Activities

June 24, 2011

First, for those not familiar with Kaiser Group it is important to understand that quarterly results by themselves are not an adequate way to evaluate the stock. The company currently does not have any revenue generating operations. Rather it was setting on a pile of cash and no debt. This situation was similar to a Special Purpose Acquisition Corporation (SPAC) only without a special purpose. Therefore, it is more important to focus on the company’s investment activities rather than its income statement.

During the first quarter the company opened a new investment position as a member in Tennenbaum Opportunities Fund VI, LLC a Delaware limited liability company. The initial investment was $1.1 million with a total capital commitment in Tennenbaum of $15 million. The unfunded commitments may be called by Tennenbaum at any time during the 30-month draw-down period that commenced in October 2010. Michael Tennenbaum is a director of Kaiser and also a Senior Managing Partner at Tennenbaum Capital Partners, LLC which manages the Tennenbaum Opportunities Fund VI, LLC.

Subsequent to the end of the first quarter, the company acquired additional shares and warrants in Bally Total Fitness Holding Corporation for $10.5 million. This doubled the company’s ownership position to 20% of Bally common stock.

In addition to the company’s investment in Tennenbaum and Bally, it also carries investments in the Paulson Gold Fund LP, Somerset Special Opportunities Fund L.P. and a mutual fund.

The company reported a net loss of $719 thousand or ($0.51) per share compared to a net loss of $837 thousand or ($0.59) per share. The loss is primarily the result of lack of revenues, payroll and professional fees related to ongoing litigation.

The company’s balance sheet remained strong with nearly $21 million in cash, certificates of deposit and marketable securities. The company had total assets of $50.2 million and total liabilities of only $363 thousand. In addition to the current assets already mentioned, the remaining assets are primarily made up of the investments mentioned earlier. The balance sheet numbers are as of March 31, 2011, but have already changed due to the additional investment in Bally made on April 18, 2011.

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