By Lisa Thompson
NYSE:DSS
READ THE FULL DSS RESEARCH REPORT
Shareholders could look forward to three potential spin-offs at DSS (NYSE:DSS). Investors are aware of the imminent spin-off of Impact Biomedical, as its red herring has been filed, and it is still in the comments phase with the SEC. Impact Biomedical filed its latest amended S-1 on January 31st and is expected to have a record date set soon. The first tranche of the spinoff could occur in the first half of 2023.
A spin-off of American Pacific Bancorp is also in the works. An S-1 is expected to be filed in late 2023 or early 2024. We expect it would be valued at the typical four to five times loans outstanding for commercial lenders, which currently stand at about $40 million thus valuing it at $144 million to $180 million. The most recent information is that it is earning approximately 10.6% on average on its loans. DSS’s current enterprise value is now $62 million.
The REIT has an 8% cap rate and is currently generating approximately 6.0%. It is still growing and it is expected to reach $200 million (or $250 million with added investment) in assets before IPOing. The company is waiting for an optimal time to spin this entity off as interest rates and the real estate market stabilize.
In all three cases, and in any others going forward, DSS plans to keep at least 50% of each entity. Shareholders will get a certain percentage and a number of shares will be newly issued to raise capital to support the growth of each newly public company.
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