(BRQS) research, news, and more from GeoInvesting

Company description

Wed, 05 Apr 2017 15:41:15 GMT

Pacific is a blank check company, also commonly referred to as a Special Purpose Acquisition Company, or SPAC, formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, purchasing all or substantially all of the assets of, entering into contractual arrangements, or engaging in any other similar business combination with one or more businesses or entities. Pacific's efforts to identify a target business have not been limited to a particular industry or geographic region, although it intends to focus efforts on seeking a business combination with a company or companies that have their primary operations located in Asia, with an emphasis on China. Pacific is sponsored by Zhengqi International Holding Limited, a subsidiary of Pacific Securities Co. Ltd., a publicly traded company in China (Ticker 601099.SS). LH Group Holdings Inc., the largest shareholder of Pacific Securities Co. Ltd., invests in financial services, clean energy as well as golf course and resort businesses globally and currently has billions of U.S. dollars in assets.

Research

Wed, 15 Aug 2018 14:49:32 GMT

Borqs Technologies Inc (NASDAQ:BRQS) ($4.45; $139.3M market cap), (NASDAQ:BRQSW) ($0.15), a global leader in embedded software and IoT products announced Q2 2018 results:

Sales of $56.3 million vs $22.1 million in the prior year
Non-GAAP EPS of $0.06 vs a loss of $0.28

“We are pleased to report another strong quarter following the first quarter of 2018, both in revenue and net income. Gross margins in our Connected Business Unit were impacted in part by a sudden component shortage which caused an increase in component prices, while the selling price of the product was determined more than six months ago. We anticipate this component shortage will be relieved in the second half of this year as suppliers ramp up the manufacturing of such components. Meanwhile, we anticipate the gross margin of the MVNO business unit for the second half of 2018 will continue to be around 30%. Based primarily on the purchase orders we have received together with the positive impact on sales that we anticipate will be generated by our receipt of an official MVNO license in July of this year, we are estimating aggregate revenues for the full year of 2018 to come within a range from $195 million to $215 million, and net income (after taxes but excluding one-off expenditures, if any) to be in the range of $4 million to $6 million. We anticipate continued robust growth in 2019 as well.”

We’re currently on the company’s conference call trying to learn more about the margin picture going forward. Margins took a hit in the quarter but it seems as though management believes margins may recover going forward. Please note the company is in the midst of raising money via a stock offering.

Research

Wed, 25 Jul 2018 17:08:07 GMT

Borqs Technologies Inc (NASDAQ:BRQS) ($4.65; $145.5M market cap), (NASDAQ:BRQSW) ($0.20), a global leader in embedded software and IoT products, announced today that, on July 23, 2018, it was awarded an official commercial MVNO license from the Ministry of Industry and Information Technology of the People’s Republic of China. The license is valid from July 12, 2018 until July 12, 2023.

“The official commercial MVNO license is a key milestone for the Company's MVNO Business Unit as well as the Connected Solutions Business Unit. First of all, I would like to thank my team for their perseverance to drive innovation,” said Pat Chan, founder and CEO of Borqs. “We firmly believe that the MVNO opportunity in China is in the cradle stage and the opportunity is enormous. Borqs is uniquely positioned to provide the needed technologies and business models to enable our customers to deploy their IoT products in our MVNO network easily and seamlessly.”

“The issuance of the official license is definitely a major milestone, and reflects the government’s recognition of our exploration and innovation for the MVNO business in the past four years,” said Jason Wang, President of the Connectivity Business Unit. “We will continue to strengthen our platform openness and innovation to provide differentiated products and services for IoT.”

Research

Wed, 16 May 2018 14:46:28 GMT

Borqs Technologies Inc (NASDAQ:BRQS) ($6.95; $217.5M market cap), (NASDAQ:BRQSW) ($0.30), a global leader in embedded software and IoT products, announced Q1 2018results:

Sales of $58.3 million vs $31.2 million in the prior year
Non-GAAP EPS of $0.04 vs a loss of $0.05 in the prior year

BRQS has two main business units, its connected solutions business which accounts for 85% of total revenues and its MVNO business which makes up the rest. The connected solutions business grew 103% year over year with MVNO growing at 22%. Growth rates and management's comments imply strong quarters to come for the remainder of 2018.

Quotes from management:

“We expect a similar strong trend in the Connected Solutions sales and anticipate moderate growth in the MVNO mobile services for the rest of the year 2018.”

We are on the conference call for any new insights.

Research

Tue, 08 May 2018 16:35:57 GMT

Borqs Technologies Inc (NASDAQ:BRQS) ($9.00; $281M market cap), (NASDAQ:BRQSW) ($0.18), a global leader in embedded software and IoT products, announced that its acquisition target KADI has received clearance for production and delivery of EV control modules beginning in May 2018 for roughly $50 million over a two year period.

In our February 18, 2018 email, we stated that BRQS filed an S-1 where the company stated in the “use of proceeds” section it intends to use the proceeds to fund the acquisition of Shanghai KADI Machinery.

Research

Mon, 16 Apr 2018 15:34:55 GMT

Borqs Technologies, Inc. (NASDAQ:BRQS) ($7.60), (Pink:BRSQW) ($0.29) - Borqs Technologies announced they have met listing requirements for the NASDAQ. In a press release out Monday, the company wrote:

“Borqs Technologies, Inc. (the “Company”) today announced that a letter from the Nasdaq Office of General Counsel dated April 12, 2018 has been received. The letter confirmed that the Company has met the listing requirement for minimum number of round lot shareholders and is also in compliance with other applicable requirements for listing on the Nasdaq Stock Market.

Accordingly, the Nasdaq Hearings Panel has determined to continue the listing of the Company’s securities on the Nasdaq Stock Market.”

Research

Mon, 09 Apr 2018 04:00:00 GMT

Borqs Technologies, Inc. (NASDAQ:BRQS) ($9.70) - In Borqs’ recently published 10-K, which was filed on April 2, 2018, the company disclosed that in order to help it gain NASDAQ listing requirements, it implemented a share purchase program with its employees in India, allowing them to purchase shares for $9.40:

“In effort to gain compliance with Nasdaq’s listing requirement that the Company have at least 300 round lot shareholders by April 10, 2018, we implemented a restricted ordinary shares purchase program with eligible employees of our wholly-owned subsidiary in India, Borqs Software Solutions Private Ltd. Eligible employees were allowed to voluntarily participate in the program, pursuant to which 222 individuals purchased an aggregate of 29,170 ordinary shares, consisting of between 100 and 250 restricted ordinary shares per individual. The purchase price for the shares was set at $9.40 per share, which was the closing price of the Company’s ordinary shares on Nasdaq on March 19, 2018, the day immediately prior to the transaction date. Program participants paid for their purchases by having the purchase amounts deducted from their regular compensation on March 23, 2018.”

Both GSUM and BRQS are participating companies in Executive Casts, a platform currently hosted on GeoInvesting to provide additional investor outreach options for small and microcap firms. More information can be seen on the companies here and here.

Research

Tue, 03 Apr 2018 14:50:34 GMT

Borqs Technologies Inc (NASDAQ:BRQS) ($8.90; $265.5M market cap), Borqs Technologies Inc (NASDAQ:BRQSW) ($0.29), is a global leader in embedded software and IoT products. The company released its financial results for Q4 2017:

Revenues were $55.4 million, an increase of 30.3% from $42.5m in the same period last year;
Adjusted net income was $1.6 million ($0.05 per share), a decrease of 54.3% from $3.6 million in the same period last year.

Quotes from management:

“For the fourth quarter, Connected Solutions Business Unit net revenues were $46.3 million in 2017, compared with $33.7 million a year ago. Our MVNO sales were $9.9 million in 2017 compared with $6.0 million in 2016. The increase in MVNO sales was due the introduction of a more efficient security check and activation system at the point of sales of SIM cards for our MVNO retailers. Using this new activation system within our MVNO services, we were able to overcome the effect from tightened security measures for SIM card activation. Including the traditional telephony businesses, our MNVO Business Unit net revenues for the fourth quarter was $10.4 million in 2017 as compared to $8.8 million for the same quarter in 2016.

We expect a similar strong trend in the Connected Solutions sales and anticipate moderate growth in the MVNO mobile services in the year 2018.”

As you may know, BRQS is participating in the Executive Casts platform hosted on GeoInvesting. Executives Pat and Anthony Chan go into great detail about their backgrounds, company, services and products through a series of video segments, here.

Research

Thu, 15 Feb 2018 18:43:03 GMT

Borqs Technologies Inc (NASDAQ:BRQS) ($9.75; $33.3M market cap), (NASDAQ:BRQSW) ($0.36), a global leader in embedded software and IoT products, filed an S-1 after hours yesterday. When any company that we track files a shelf offering, we always look at the “use of proceeds” section to see if the possible offering is being used for a specific reason or if it is just boilerplate language. In this case, BRQS states it intends to use the proceeds to fund the acquisition of Shanghai KADI Machinery.

As a rule, while we don't like dilution, the use of proceeds for acquisitions that could be accretive to earnings is an exception to this rule. We will need more details before reaching any conclusions on the acquisition.

Comments & Business Outlook

Mon, 22 Jan 2018 14:31:00 GMT

SANTA CLARA, Calif., Jan. 22, 2018 (GLOBE NEWSWIRE) -- Borqs Technologies, Inc. (Nasdaq:BRQS) (the “Company”), a global leader in embedded software and products for the Internet of Things (IoT), announces the signing of an agreement to acquire 13.8% of both Shenzhen Crave Communication Co., Ltd (“Crave”) and its affiliated business entity in Hong Kong, Colmei Technology International Ltd (“Colmei”).

Crave, a manufacturer of mobile terminal devices, was formed in 1996 and incorporated in 2008 in Shenzhen, China. With multiple high speed SMT lines, assembly lines and packaging lines, its annual capacity reaches over 20 million units. Ideally situated in Shenzhen, Crave exports final products for customers in South America, India, Indonesia, the Philippines and Vietnam. Colmei, Crave’s affiliated entity under common ownership, is a sales entity located in Hong Kong with established relationships with international banks to facilitate transactions with its global clients. Both Crave and Colmei are privately owned. In 2017, Borqs has contracted Crave/Colmei for multiple projects in the manufacturing of Borqs’ products.

On January 18, 2018 the Company agreed to acquire shares representing 13.8% of both Crave and Colmei, for $13 million, consisting of $3 million in Company ordinary shares to be issued at closing and $10 million in cash to be paid over 3 years.

Pat Chan, the CEO of Borqs: “Our investment into Crave and Colmei will benefit us in multiple ways: i) ensure access to valuable manufacturing capacity, ii) assist us with supply chain financing by leveraging their resources with financial institutions in Hong Kong, iii) improve negotiation leverage with component suppliers based on Crave’s purchasing volume, and iv) providing premium quality manufacturing.”

Mr. Xilin Fang, Chairman of both Crave and Colmei, said: “The investment from Borqs, a Nasdaq listed company with strong R&D capabilities, is an endorsement by itself. The innovative designs that Borqs brings to market will add attraction to our products within this highly competitive mobile communications industry. I believe the combination of Borqs, Crave and Colmei will be a win-win for both companies.”

Research

Tue, 16 Jan 2018 16:17:15 GMT

Borqs Technologies Inc (NASDAQ:BRQS) ($6.45; $198.69M market cap), Borqs Technologies Inc (NASDAQ:BRQSW) ($0.23), is a global leader in software and products for internet of things.

BRQS announced on Friday after market close, via 8k only, that it repurchased backstop shares from Zhengqi Capital at a purchase price of $10.40 per share (for a total of $10,047,814.40). Remember that Zhengqi sponsored the going-public of Borqs by supporting the company with necessary funds during the reverse merger. Now, Borqs allowed Zhengqi to exit the position through the repurchase of shares. Also notice that the buy back is at a significant premium to prevailing market prices.

Simultaneously Zhengqi forfeits it right to 1,278,776 Guarantee Escrow Shares. Those shares will be treated as follows:

51,151 Issuer ordinary shares (4% of 1,278,776 Issuer ordinary shares) shall be treated as Additional Indemnity Escrow Shares and be deposited in the Indemnity Escrow Account; and
The remaining 1,227,625 Issuer ordinary shares shall be distributed to the Company Shareholders based on their respective Pro Rata Share.

Borqs accomplished two important things here. Firstly, they got a big selling shareholder out of the stock. Secondly, they redistribute the shares to shareholders, effectively slightly increasing the percent ownership stake of those shareholders.

You can view CFO Patrick Chan’s view on the original Buyback program here.

Research

Wed, 03 Jan 2018 17:28:43 GMT

** BRQS Joins Executive Casts Platform

Borqs Technologies, Inc. (NASDAQ: BRQS) has joined the "Executive Casts" platform, hosted on GeoInvesting. Pat Chan, Borqs' CEO, Founder and Chairman and Anthony Chan, Borqs' CFO and Executive Vice President go into detail about various aspects of the company.

Borqs is a global leader in software and products for the internet of things ("IoT"), providing customizable, differentiated and scalable Android-based smart connected devices and cloud service solutions.

Pat Chan discusses the role of mobile virtual network operators (MVNO) and how Borqs was able to become a top MNVO provider. He also discusses the Company's relationships with Intel and Qualcomm and how, through its asset light approach, the Company's IP expands hardware design capabilities for its customers. Pat explains what drove him to build a company like Borqs, and his vision for the future.

Anthony Chan delves into the financial aspects of the company, including pricing models, economics of the MVNO segment, revenue split by country and segment, the Company's balance sheet, the complexities of blended gross margins, and customer concentration.

The full interviews and video clips can be viewed at the following links:

Full Interviews -https://geoinvesting.com/borqs-technologies-inc/
CEO Pat Chan -https://geoinvesting.com/borqs-technologies-inc-ceo-pat-chan-featured-videos/
CFO Anthony Chan - https://geoinvesting.com/borqs-technologies-inc-cfo-anthony-chan-featured-videos

You can see past research on BRQS here and here.

Research

Fri, 24 Nov 2017 16:30:26 GMT

Borqs Technologies Inc (NASDAQ:BRQS) ($5.22; $160.9M market cap), Borqs Technologies Inc (NASDAQ:BRQSW) ($0.22), is a global leader in software and products for internet of things. According to a Chinese news report, BRQS attended the conference for China Mobile’s global partners in Guangzhou, Guangdong Province in China, and also showed its BoTree smart locating tracer, which is the first smart wearable product applying the NB-IoT technology and using Qualcomm's’ MDM9206 chip.

Research

Tue, 21 Nov 2017 16:50:28 GMT

Borqs Technologies Inc (NASDAQ:BRQS) ($5.53; $170.3 m market cap), Borqs Technologies Inc (NASDAQ:BRQSW) ($0.28), a global leader in software and products for internet of things, announced Q3 2017 results:

Sales of $44.9 million vs $27.5 million in the prior year
Non-GAAP net loss of $0.28 vs non-GAAP net loss of $0.51
The company issued non-GAAP net income is $3.0 million vs a loss of $2.0 million in the prior year. These figures do not reflect the accretion to redemption value of convertible redeemable preferred shares which we believe is likely a true accurate assessment on a go forward basis.
Non-GAAP EPS based on company issued non-GAAP net income is $0.19 vs a loss of $0.47, on 15.1 million and 4.2 million shares outstanding.
The share count as of November is 30.8 million shares, although we believe the fully diluted share count will come in at around 39.0 million shares.

Quotes from management:

On a nine-month basis, Connected Solutions Business Unit net revenues were $76.0 million in 2017, compared with $51.7 million a year ago, and MVNO net revenues were $21.5 million compared with $23.3 million in 2016, respectively. The reduction of the MVNO revenue was due to enforcement of strict security policies for sales of SIM cards in China. In the third quarter of 2017, the Company designed a new security check and activation system that simplifies the sales procedure. Using this new activation system within our MVNO services, we were able to overcome the effect from tightened security measures for SIM card activation, and our third quarter MVNO revenue increased to $7.8 million compared with $7.2 million in the third quarter of 2016.

We expect a similar strong trend in the Connected Solutions sales and anticipate moderate growth in the MVNO mobile services in the coming quarter.

While revenues in that segment were slightly down this quarter, the Company sees moderate growth in that division in the coming quarter. More importantly, it also sees a continued strong growth trend in its larger business segment (Connected Solutions).

We believe this is a step in the right direction for the Company. While we were early in our BRQSW call, these trends could lead to the initial thesis playing out.

Research

Tue, 10 Oct 2017 17:34:09 GMT

BRQS ($5.55) and Qualcomm Technologies, Inc., a subsidiary of Qualcomm Incorporated (QCOM), announced commercial ready smartwatches, tracker and IoT Modules featuring QCOM platforms in India.

BRQS is a global leader in software and products for IoT providing customizable, differentiated and scalable Android-based smart connected devices and cloud service solutions.

Research

Fri, 25 Aug 2017 14:53:57 GMT

BRQS ($5.95) & BRQSW ($0.40) -

Borqs issued an 8K filing yesterday after market close, announcing a buy-back program to spend up to $6 million until December 31, 2017 to buy back shares at or below $10.40.

Quote from the press release:

"The Board of Directors of the Borqs Technologies, Inc. believes that the current market price of the Company’s ordinary shares does not reflect the Company’s inherent long-term value and has approved a share buy-back program. The management of the Company is authorized to conduct open market repurchases of its ordinary shares from today forward until December 31, 2017, in accordance with circumstances, volume and time window allowable under securities laws and regulations, at a price not higher than $10.40 per share, up to an aggregate repurchase price of $6 million. The buy-back program does not obligate the Company to repurchase a minimum number of shares, and the program may be modified, suspended, or discontinued without prior notice.”

While there is no obligation to buy back shares under this program, we feel this initiative is likely an attempt to support the initially weak stock, and enable the sponsor and underwriter to exit their position. Recall that the transaction needed a private placement investment of approximately $10.8 million by sponsor Zhengqi Capital and underwriter Earlybird Capital to fulfill the minimum capital requirements. This private placement took place concurrent with the consummation of the merger one week ago, and shares were bought at $10.40 per share. It’s reasonable to believe that the sponsor and underwriter want to get at least $10.40 per share back in play.

GIven the recent trading volume, we feel that $6 million is a lot more than needed to bring the stock price to $10 per share.

The filing also summarized the transaction and issued the financial results for Borqs for the 1st half of 2017. Net revenue on a consolidated basis for the six months ended June 30, 2017 was $54.1 million as compared to $50.6 million for the same period last year, and EBITDA $3.5 million compared to $3.3 million for the same period last year. However for Q2 2017 revenues declined to $22.5 million from $27.3 million in the prior year period.

Borqs also filed its pro forma financial statements for the year ended June 30, 2017, which gives us more clarity. Borqs has an undiluted share count of 30.7 million and fully diluted share count of 38.5 million. Cash net of interest bearing debt as of June 30, 2017 amounted to $10.4 million.

At $6 Borqs trades at an EV/Sales of 1.8 compared to an industry average of 2.6. While the trailing EBITDA multiple of roughly 33 does not look cheap, you have to pay attention to Borqs’ superior growth profile, and the fact that EBITDA margin for the trailing period was below industry average.

We want to highlight again how ridiculously cheap the warrants are relatively priced. Remember the warrants have a five year time span until expiration. Our option pricing analysis yielded that, with an implied volatility of 30% (which is a rather conservative estimate), the warrants should be priced at roughly $1.25 per warrant if the stock is really pushed up to $10.40.

Research

Mon, 14 Aug 2017 17:25:57 GMT

PAAC announced on Friday after hours that its shareholders approved the proposed business combination with Borqs International. We have a speculative long bet on the warrants, which rely on the merger closing.

The wording of the release worried us, because it still mentions the business combination as “potential”, and upon a successful close of a merger you would typically see the announcement of the new ticker, which PAAC didn’t announce. The press release elaborated:

”Following yesterday's receipt of shareholder approval, the parties are seeking to satisfy or negotiate waivers to any remaining closing conditions to the proposed business combination. Without satisfying all remaining closing conditions or receiving all waivers, no assurance can be made as to whether the proposed business combination will be consummated. If Pacific does not consummate the business combination by the close of business on August 21, 2017 , it will be required to dissolve and liquidate its trust account by returning the then remaining funds in such account to its then-public shareholders.”

What is the Issue?

We dug into filings to identify and analyze the problem.

The problem is that the redemption amount, meaning the shareholders that chose to redeem their shares as part of the merger, exceeded the maximum amount. From the latest proxy filing:

“(2) holders of no more than 2,810,102 of Pacific’s ordinary shares elect to have their shares redeemed upon the consummation of the Business Combination at the conversion price of approximately $10.49 per share, which represents the maximum redemption such that the trust account maintains the minimum required balance of $24,000,000 and is a full pro rata share of the trust account”

The press release tells us that in fact 3,841,131 shares were redeemed, exceeding the maximum amount by approximately 1 million shares.

The deal is still in the works, but the $24 million minimum cash balance condition is not satisfied as of now. The condition has to be satisfied or the merger agreement has to be amended before August 21st, putting PAAC on a tight timeline.

How can it be Resolved?

It seems that PAAC in fact anticipated the redemption problem. That is why we saw two amendments to the original merger agreement, which added a backstop agreement. The backstop agreement that came with the first amendment commits Zhengqi International Holding Limited, an affiliate of sponsor Pacific Securities Co., to put up the remaining balance in case shareholder redemption is too high. From the backstop agreement dated May 11th 2017:

“ The Subscriber hereby irrevocably subscribes for and agrees , subject to the substantially concurrent Merger Closing and the other terms and conditions set forth herein , to purchase from the Company that number of Ordinary Shares equivalent to the Final Shortfall at a purchase price of $10.40 per share (such shares, the “ Backstop Shares ”), and the Company agrees to sell such Backstop Shares to the Subscriber at such price per share (such offering, the “ Backstop Offering ”); provided, that, if requested by the Subscriber, the Company shall (provided it is lawful to do so) issue and sell to the Subscriber an additional number of Backstop Shares in the Backstop Offering, up to a total of Twenty-Four Million U.S. Dollars ($24,000,000) when aggregated with all amounts for Market Shares and Backstop Shares (the “Backstop Cap”).”

With about 3.8 million shares redeemed, PAAC has to raise an additional $13 million pursuant to the backstop agreement. From the latest proxy:

“Additionally, any shareholder redemptions in connection therewith may not result in net tangible assets of Pacific falling below $5,000,001 or the amount in the Pacific trust account, together with the proceeds from the Backstop or any Commitment Investment, but excluding the payment of Pacific’s reasonable transaction expenses, falling below $24,000,000. These conditions effectively require us to generate at least $24.0 million in gross proceeds pursuant to the Backstop or in a Commitment Investment if the holders of all of the 5,096,004 public shares outstanding as of the record date redeem their shares in connection with the Business Combination ”

Bottom Line

While the wording of Friday’s press release does not seem confident, it is our understanding that with the backstop agreement in place, the deal is still scheduled to consummate on time. The backstop agreement should be taking effect, and Zhengqi Capital is committed to supplying the required capital. Once again, our thesis comes down to the fact that Borqs as well as PAAC are apparently fully committed to make a deal happen.

The high redemptions proabbly have negative implications on the operating company, implying that public shareholder interest is not as high as hoped. Think of it as an undersubscribed IPO.

While we do not have certainty and there are still risks to the deal, we understand that the problem of the minimum cash balance was anticipated and taken care of with the backstop agreement.

This quote from the proxy filing supports this opinion.

“Our Sponsor has agreed to purchase up to $24.0 million of Pacific ordinary shares (or potentially more, at Sponsor’s sole election) as part of the Backstop in order to ensure that there is at least $24.0 million in cash available in the Company immediately following the Business Combination.”

Our next task will be to determine a proper valuation for the warrants based on this new information if the deal closes. But we still believe the warrants should trade substantially higher, provided the underlying common shares hold steady.

Research

Mon, 03 Jul 2017 04:00:00 GMT

Pacific Special Acquisition (NASDAQ:PAAC) Revised Proxy

PAAC issued a 8K and revised proxy today. The revised agreement slightly changes the allocation of the Earnout Shares among the Sponsor, the Commitment Investors and the remaining portion of the Earnout Shares that are cancelled if not earned. It also allows for PAAC to conduct a private placement of shares concurrent with the business combination. We do not interpret the news as significant for shareholders nor to our thesis. Please see our coverage here.

We are still waiting for the announcement of a date when the shareholder vote will occur.

Have a great 4th of July!

Research

Mon, 22 May 2017 15:01:54 GMT

PAACW ($0.39) - Friday after the close, PAAC filed a preliminary proxy with the SEC announcing that the Company intends to hold a special meeting of shareholders to vote on the proposed business combination with Borqs International. While no date and time have been announced, this is yet another step in the right direction for the consummation of a business combination.

It was just last week when we noted that PAAC filed an amendment purchase agreement with Borqs which we felt enhanced the likelihood of the merger. Typically, we would expect the announcement of the date for the proxy vote within three weeks after the preliminary proxy date.

On April 17, 2017 we stated we initiated a highly speculative long trade in PAACW, betting on the consummation of a business merger. See our full research article on PAACW and why we feel the warrants have multibagger potential.

Research

Mon, 15 May 2017 16:13:11 GMT

PAACW ($0.35) announced on Friday after market close an amended agreement with Borqs. Highlights of the amended purchase agreement include:

Acquisition price lowered from $303 million to $270 million
New earn out agreement pays Borqs shareholders only if income targets are met
New backstop agreement allows sponsors more flexibility in supporting the transaction through private placements or open market purchases

All three significant changes are positive for PAAC shareholders. First, they get the same company at a cheaper price. Second, it gives them more incentive to perform well. We believe the most important signal in the release is Pacific Securities’ commitment to fund the transaction. Our initial analysis explained how Pacific Securities must consummate on its first SPAC deal to become a serious player in this market, so we would expect them to commit the necessary resources.

On April 17, 2017 we stated we initiated a highly speculative long trade in PAACW, betting on the consummation of a business merger. You can see our full research article on PAACW and why we feel the warrants have multibagger potential here.