The recently-announced sale of Piper Aircraft turns out to offer good news beyond the mere fact ACAS still has valuable things to sell, and is able to close transactions. The first part of the next wave of insight Piper offers is that Piper represents a sale at a profit: ACAS realized $31 million on the deal. Making money is always good, right? This works against the thesis that ACAS faces a forced-sale environment. ACAS' internal rate of return of 19% is a nice return for ACAS' shareholders, and speaks well of ACAS' management of funds.
The second good news in the Piper transaction is much more important to current shareholders. After all, that prior gain was baked into the share price, right? All the current shareholders will get from a realization like a sale is a tax obligation. What current shareholders want to see -- shareholders who are looking at ACAS' below-NAV trading range and wondering whether that foreshadows more NAV collapse or portends terrific profits as prices rationalize -- is what Piper's sale means for ACAS' valuation of its assets. And here we have a red-letter day. When ACAS exited Piper -- both equity and debt -- it did so at a price 33% above the FAS-157 "fair value" of the Piper assets at the close of the 4Q2008 quarter.
The fact that ACAS-held debt is worth a lot more than FAS-157-compliant valuations suggest is something shareholders wanted to see confirmed, and this is certainly help in that direction.
Next up: ACAS' quarterly announcement for 1Q2009.
Let's see if the good news continues.