Description

Stone & Webster is an engineering/construction company. The trading symbol used to be SW before it was delisted from the NYSE, then it changed to SWBI, and now it is SWBIQ. Because of major cost overruns, Stone and Webster has been forced to file for bankruptcy. But it is still a valuable company. This is why Jacobs Engineering (JEC) has agreed to aquire all of the companies assets and liablities for $150 million. The following is from the press release dated June 2, 2000:

"As previously announced, Stone & Webster has signed a definitive sale agreement with Jacobs regarding a proposed transaction in which Jacobs would acquire substantially all of Stone & Webster's assets in exchange for $150 million in cash and stock and the assumption of substantially all of the Company's liabilities shown on its March 31, 2000 balance sheet, standby letters of credit, and its liabilities under a new credit facility entered into on May 9, 2000 pursuant to which up to $50 million of credit is being made available to the Company. The $50 million credit facility with Jacobs, which is now in effect, is intended to enable Stone & Webster to operate its businesses until the asset sale is consummated."

Stone & Webster has no preferred stock and 14.2 million shares of common stock outstanding. Dividing $150 million by 14.2 million gives us $10.56 per share of stock. Yet you can buy each share of stock for well under a dollar right now. How much of the $150 million will actually go to the shareholders? That cannot yet be determined. Also from the press release:

"As Stone & Webster has previously stated, because the proposed sale of assets will occur in the context of a pending Chapter 11 case, it is not possible to determine at the present time what value, if any, will ultimately be received by Stone & Webster's stockholders. Such a determination can only be made after the completion of the competitive bid process provided for under Chapter 11, consummation of the asset sale transaction, and the substantial resolution of Stone & Webster's Chapter 11 case."

I think that it's worth the risk to pick up some shares at these low prices. The price is so low because words like "bankruptcy", and "over the counter stock" scare away almost all investors and cause the stock to trade below it's true value. (The class action suits on behalf of shareholders also don't help.)

Catalyst

Once the courts have resolved all the issues, there will be a deterimination of how much money you will be getting. You will have to be patient.