Company intends to delist next year. What happens to my short position?

[BaconFat]

I recently shorted some shares of a company that just did a run-off and has decided to cease active operations. They just released a statement saying that they intend to delist from the NYSE early next year.

Here is the full statement -> https://www.globenewswire.com/news-...insurance-Holdings-Ltd-Announces-Run-Off.html

How could this affect my short position? Also, how could/should the run-off affect this stock? I'm not familiar with the process. Any advice?

 

[Ryan81]

If it were me, I'd close the position before they de-list, to eliminate any ambiguity in what happens.

 

[BaconFat]

It's highly unlikely that I would still be holding the position by then since I tend to cover shorts within a matter of days or a few weeks, but I'm just curious what the possibilities could be. This is an uncommon situation.

 

[nooby_mcnoob]

Well, according to Yahoo, book value is $10 so if you shorted it you're probably going to get squeezed.

 

[BaconFat]

Well, according to Yahoo, book value is $10 so if you shorted it you're probably going to get squeezed.

Yeah, I heard the same thing, but oddly enough the shares aren't moving up today. It spiked after the news in after-hours yesterday and that's when I shorted it.

 

[nooby_mcnoob]

Yeah, I heard the same thing, but oddly enough the shares aren't moving up today. It spiked after the news in after-hours yesterday and that's when I shorted it.

I'd say at this point you're making a fundamental not technical decision

 

[Robert Morse]

If you are short, you will be responsible for any cash payment made to shareholders.


HAMILTON, Bermuda, July 25, 2019 (GLOBE NEWSWIRE) -- Blue Capital Reinsurance Holdings Ltd. (NYSE: BCRH, BSX: BCRH.BH); (“Blue Capital” or the “Company”) today announced that, after considering strategic alternatives, its Board of Directors has decided to cease active operations and pursue an orderly run-off of its liabilities and in-force portfolio and return capital to shareholders as it winds up its operations. As and when capital becomes available after settlement of existing liabilities and expenses, and in accordance with all applicable regulatory requirements, the Company expects to declare special distributions to shareholders as it winds up its affairs and operations. The Company currently expects, based upon management’s best available estimates, that 20% of its existing shareholders’ equity as of June 30, 2019 will have been distributed or will become available for distribution in the remainder of 2019, 65% will become available for distribution in 2020 and 15% will become available subsequent to 2020. The Company expects the first of these special distributions to be declared on or about August 30, 2019.

 

[BaconFat]

I'd say at this point you're making a fundamental not technical decision

Well yeah.. like I said, I'm not familiar with this situation. That's why I'm asking about it. Right now I'm just watching it closely to see what happens today.

 

[BaconFat]

If you are short, you will be responsible for any cash payment made to shareholders.

Ah...ok. I didn't quite understand that part. Thank you. So it seems I should probably cover prior to August 30th?

 

[tiddlywinks]

This is an uncommon situation.

Yes it is! And thank you for posting it.

Seems shareholders will get distributions in 2019,2020,and later. The majority, 65% of the total distributed will occur in 2020. Simply, what this means to a holder of a short position is that they will incur paying the distributions... like being short a stock on the record date, shorts are responsible to pay the dividend.

Interesting too, they "believe" shares will trade on the pink sheets after de-listing and de-registration. Smells like an empty shell, possibly with shareholders.

Thanks again