Although ACAS itself is not subject to "margin calls" because its most concerning debts (those with a breached net asset covenant) are unsecured, ACAS' various shareholders are not so lucky. Joining those of us with ugly ACAS-related margin calls is ACAS' own founder and CEO Malon Wilkus.
Under a pre-Sarbanes-Oxley loan agreement, Wilkus had borrowed from the company funds secured by ACAS shares. Wilkus stated that he was proud never to have sold a single share of ACAS. As ACAS' price declined, he added to the 208,200 shares securing his loans an additional, then-unencumbered 852,456 shares, to prevent foreclosure. As a result, Wilkus has lost 1,060,656 shares as a result of sticking with the company -- and keeping faith with other shareholders -- as its share price has been hammered by the marketplace.
The fact that ACAS' CEO stuck with the shares as their price plummeted, and multiplied the number of shares at risk of foreclosure in order to protect any shares from risk of loss, illustrates his personal confidence in ACAS. Unfortunately, the market did not share his confidence, hence the stock price decline to less than 1/15 its annonced NAV. Malon Wilkus continues to own 630,000 shares through participation in an ACAS incentive bonus plan, some of which shares have not yet vested.
The reduction in outstanding shares should be reflected in the next quarterly report. Hopefully we will by then also have a report on share issuance associated with the ECAS transaction, and get some indication regarding the associated change in NAV.