Florida Gaming Shares Seesaw After Sale

News of a successful bankruptcy auction sent shares of Florida Gaming Corp. soaring to $1.25 a share, only to spike again after a tip from an anonymous blogger suggested that equity holders might receive a substantial distribution.  The price plummeted, however, after an SEC filing on April 7 confirmed that shareholders should not expect any proceeds resulting from the auction.

Following ABC Funding Inc.’s successful $155 million bid for Florida Gaming’s assets, which include the historic Miami Jai-Alai casino, the company’s share price increased almost 380%, to $1.25 from $0.33.  Days later, on April 1, a blogger named Wise Alpha claimed that $10.5 million would be left for equity holders—worth about 200% of the company’s market cap that day—which again sent shares soaring to $1.22.

The shares quickly fell, and the report filed with the SEC sealed their fate. “The company does not expect that its preferred or common stockholders will receive any distribution as a result of the auction,” Florida Gaming said in an 8-K filed April 7.

The company’s shares are now trading at $0.14.

The SEC doesn’t stop trading, even when a company says shares are likely to be canceled. The rapid rise and fall is not uncommon for publicly traded companies, particularly when the sale of a company’s assets is mistaken for the sale of the company itself.

ABC Funding beat out Mohegan Tribal Gaming Authority , Z Capital Partners LLC and Silvermark LLC for Florida Gaming’s assets, after it was allow to credit bid, or forgive debt, up to $100 million.

Florida Gaming and its historic sporting venue filed for Chapter 11 bankruptcy in August 2012. The bankruptcy filing stemmed from an $87 million loan ABC Funding extended in 2011, when Florida Gaming expanded its casino offerings to take advantage of the state’s legalization of gambling.

Miami Jai-Alai opened in 1926, offering live matches of jai-alai, a blazing-fast handball-like game. Jai-alai is played on a walled court, or fronton, with a rock-hard ball, or “pelota,” and a claw-like wicker basket called a “cesta.” The game is said to have originated in Spain’s Basque region and was brought to Florida by Cuban immigrants, where it was first played professionally in the 1920s.

Write to Tom Corrigan at [email protected]. Follow him on Twitter at TomCorrigan_.