Clint Carlson’s fund Carlson Capital has disclosed in a recent filing with the SEC a letter sent to the Special Committee of the Board of Directors of SWK Holdings Corp (OTCMKTS:SWKH), wherein it has mentioned the offer to buy 80 million shares at $1.20 per share of newly issued common stock of SWK Holdings Corporation. Currently, Carlson holds around 13.15 million shares of the company, including warrants, the activist stake accounting for 30.5% of SWK Holdings Corp (OTCMKTS:SWKH)’s common stock.
Carlson Capital informed in the letter that it was disappointed in the Special Committee’s failure to pursue Carlson Capital’s proposed transaction. Carlson Capital stated that it will engage in the with the following terms:-
- SWK Holdings Corp (OTCMKTS:SWKH) will conduct a discounted rights offering for all SWK stockholders as currently contemplated by the registration statement on Form S-1, with Carlson serving as the backstop for no fee.
- SWK will issue an equivalent number of shares of common stock in a private placement such that Carlson will own 71% of SWK’s post-transaction equity interests, at a price of $1.20 per share, concurrently with the rights offering.
- SWK Holdings Corp (OTCMKTS:SWKH) will get a 40-day “go-shop” period wherein SWK will entitled to opt for other transactions that are more favorable to the company.
- After the agreement Carlson will not be able to acquire shares of SWK, for a stipulated period, to prevent the increase in the ownership by more than 5%.
If Carlson sells its stake in SWK Holdings Corp (OTCMKTS:SWKH) to a third party, leading to the third party owning 40% of SWK and Carlson owning less than such third party. Carlson will have to shed the same proportion of its shares on the same terms as the Carlson sale (i.e., a “tag-along” right)
Clint Carlson’s hedge fund employs a multi-strategy approach to investing, borrowing from risk arbitrage, relative value arbitrage (mostly pairs trading), convertible arbitrage, distressed/credit arbitrage and traditional long/short strategies and event-driven arbitrage.
SWK Holdings Corp (OTCMKTS:SWKH) is a specialized finance company that focuses on the global healthcare sector.
Carlson Capital raised its stake in NRG Energy Inc (NYSE:NRG) by 165% to 6.27 million shares in the first quarter of 2014. The fund also initiated a position in Forest Laboratories, Inc. (NYSE:FRX) during the same period and now has 2.08% of its equity portfolio invested in the company comprised of 1.92 million shares.