BATON ROUGE, La., Nov. 8, 2021 /PRNewswire/ -- Prescience Point
Capital Management, ("Prescience Point"), a research-focused,
catalyst-driven investment firm that seeks to earn superior
risk-adjusted returns uncorrelated to the broader market, today
issued the following open letter to investors regarding new,
positive findings related to the publicly-traded warrants of
AerSale Corporation (Nasdaq: ASLE) ("AerSale" or "the
Company").
Dear Fellow AerSale Shareholders, Warrant Holders and Other
Interested Parties:
In a research report published on October
27, 2021, Prescience Point concluded that AerSale is one of
the most undervalued public companies we have ever seen. We
continue to believe that the Company's shares could double within a
month due to several near-term catalysts, which include FAA
approval and an initial order for AerAware, the Company's
game-changing wearable heads up display product, as well as our
view that the Company will have to significantly raise its FY 2021
guidance in connection with its third quarter conference call,
scheduled for Tuesday, November 9,
2021.
Based on conservative assumptions, we believe AerSale shares are
worth $47 today, and are likely to
exceed $100 within the next two to
three years.
We believe at the moment there is confusion among investors
regarding when AerSale will be able to redeem its public warrants
(Nasdaq: ASLEW). Our research over the past few weeks has provided
clarity on this matter and shows, rather definitively, that
AerSale is restricted by law from redeeming its public warrants
before October 1, 2022. This is
extremely positive for AerSale's public warrant holders, not only
because it means that the warrants will remain outstanding for
nearly one year or more, but also because it means that the
warrants are currently undervalued. At the moment, the
Company's public warrants trade closely in-line with their
intrinsic value, which means that the market is incorrectly
assigning zero time premium to them. We believe these warrants
should include a time premium of at least $1.00.
Our conclusions are based on the following key findings:
- The CARES Act included provisions for the Department of
Treasury ("Treasury") to provide payments to certain contractors in
the airline industry to be exclusively used for the continuation of
payment of employee wages, salaries, and benefits.
- During the pandemic, AerSale has received payroll support from
the Treasury on three separate occasions. The Company
received $16.4 million on
June 9, 2020 under the Payroll
Support Program ("PSP1"), $5.5
million on March 3, 2021 under
the Payroll Support Program Extension ("PSP2") and $5.5 million on March 11,
2021 under the American Recovery Plan ("ARP"), which
authorized the Treasury to provide additional payroll support
("PSP3") to contractors that received financial assistance under
PSP2.
- As part of the PSP3 agreement and ARP, AerSale was required to
agree that "through September 30,
2022…neither the...contractor, nor any affiliate thereof,
purchases, in any transaction, an equity security of the air
carrier or contractor, or of any direct or indirect parent company
of the air carrier or contractor, that, in either case, is listed
on a national securities exchange."
- As per 15 U.S.C. 78c(a), for the purposes of the PSP1, PSP2 and
PSP3, "equity securities" is defined as "any stock or similar
security; or any security future on any such security; or any
security convertible, with or without consideration, into such a
security, or carrying any warrant or right to subscribe to or
purchase such a security; or any such warrant or right; or any
other security which the Commission shall deem to be of similar
nature and consider necessary or appropriate, by such rules and
regulations as it may prescribe in the public interest or for the
protection of investors, to treat as an equity security."
- As noted in the FAQs issued for PSP2, there are very limited
instances excluded from the buyback provisions of PSP1, PSP2, and
PSP3, and none of these exclusions are applicable to AerSale's
current situation.
- Although some public companies that received financial
assistance under the CARES Act have repurchased shares and redeemed
public warrants, these companies received financial assistance
under the Paycheck Protection Program ("PPP") which, unlike the
PSP, does not impose explicit limitations on the repurchase of
equity securities.
Based on the above, we cannot imagine a scenario where a warrant
redemption by AerSale would be allowed by the PSP statutes or the
PSP agreements prior to October 1,
2022. Under each statute it is clear that failure to comply
with the provisions could result in the "clawback of any financial
assistance provided upon failure" by a recipient to comply with the
buyback provisions.
However, more concerning is the potential for civil and criminal
liability relating to a warrant redemption by AerSale or an
affiliate prior to October 1,
2022. By signing PSP1, PSP2 and PSP3, AerSale acknowledged
that a materially false, fictitious, or fraudulent statement (or
concealment or omission of a material fact) in connection with this
Agreement may result in administrative remedies as well as civil
and/or criminal penalties. The Treasury was also very clear
in each PSP agreement that it would not hesitate to refer any
noncompliance or any allegations of fraud, waste, or abuse to the
Treasury Inspector General.
We hope that you find the information included herein about
AerSale's public warrants useful and instructive. Should the
need arise, we will provide further updates to the public on this
and other matters related to AerSale on our website and Twitter
account.
Warm Regards,
Eiad Asbahi, CFA
Prescience Point Capital
Prescience Point has a long position in shares and warrants of
AerSale and stands to benefit if the share price rises.
About Prescience Point Capital Management
Prescience
Point Capital Management is a research-focused, catalyst-driven
investment firm that seeks to earn superior risk-adjusted returns
uncorrelated to the broader market. Unlike traditional investment
strategies, we are unconstrained and can opportunistically invest
globally, across asset classes, industry verticals and capital
structures. Whether investing in misunderstood distressed assets,
creating value through shareholder activism, or uncovering fraud,
we seek to capitalize on opportunities that others miss or fall
outside the rigid mandates of most investment firms.
Our uniqueness resides in our unconventional thinking, deep
research, intellectual curiosity and willingness to go against the
prevailing wisdom.
The firm was founded by investor Eiad
Asbahi in 2009 and is headquartered in Baton Rouge, LA.
For more information please visit
www.presciencepoint.com or follow @PresciencePoint.
Prescience Investment Group, LLC is a member of the Financial
Industry Regulatory Authority, CRD number 152721.
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SOURCE Prescience Point Capital Management