The Saga at American International Industries Continues

October 13, 2011

On April 7, 2011 American International Industries (AMIN.OB) announced that it received a $15 million offer for the purchase of the 287 acres it owns on Galveston Bay. While the offer sounded great on the surface, the Company was going to receive a six year first mortgage Promissory Note with a 4% interest rate and the balance of $3 million in cash or other valuable consideration. My guess is the Company would have received “other valuable consideration” and not cash and would have ended up with the property back on its books after the buyer defaulted on the note. In addition, the offer was not subject to a legally binding agreement.

On September 7, 2011 AMIN filed suit against Texas Community Bank N.A. (TCB) for not releasing its security interest in the 287 acres on Galveston Bay among other complaints. Now the company has announced that as part of a settlement agreement with TCB, that it has sold the 287 acres on Galveston Bay to the bank for consideration of $3.7 million in the form of a secured note collateralized by a first lien on 17 condominium units at the waterfront Dawn Condominium complex in Galveston, Texas. The company states the units have an appraised value of $3.9 million and are listed for sale.

AMIN has also entered a profit sharing agreement with TCB if the 287 acre property is sold at a minimum price of $5 million to an unrelated party on or before December 31, 2013. According to the agreement AMIN will receive the difference between the first $5 million in sale proceeds and $3.1 million. Any amount that exceeds $5 million will be shared equally between AMIN and TCB.

Therefore, it would appear that the value of the property to the company has dropped by at least 66% just since April of 2011 and potentially by over 75% if the property is not sold by December 31, 2013. I am not sure housing prices prices even fell that quickly at the height of the crash. I am nearly certain they didn’t in the Houston area.

While I am glad to finally start to see the light at the end of the tunnel on this property the company has been trying to sell for years, it appears management has fumbled the ball once again.

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