Luby’s (LUB) Stock Rockets On Liquidation & Dissolution Plans

Luby's LUB Stock News

Luby’s, Inc. (NYSE: LUB) is flying in the market this morning, something not commonly seen with failing companies. Nonetheless, it is how the company will close its doors that has investors so excited today. Here’s what’s going on:

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LUB Stock Rockets As Board Approves Liquidation Plan

Luby’s has been struggling for some time. However, the COVID-19 pandemic seems to be the nail in the coffin for the company. Nonetheless, there’s light at the end of the tunnel, and investors seem to be loving the opportunity here.

In a press release issued early this morning, the company said that it approved and adopted a plan of liquidation and dissolution. LUB said that the plan provides for the sale of the company’s assets and the distribution of net proceeds to the company’s shareholders. Once this is complete, the company will be dissolved.

The news comes after an announcement by the company in June that it would be selling its assets. Nonetheless, before the dissolution plan can come to fruition, investors must vote in favor of the move. This vote will take place in a special meeting of stockholders.

In a statement, Christopher J. Pappas, CEO and President at LUB, had the following to offer:

We believe that moving forward with a Plan of Liquidation will maximize value for our stockholders, while also preserving the flexibility to pursue a sale of the Company should a compelling offer that delivers superior value be made. The Plan also continues to provide for the potential to place the restaurant operations with well-capitalized owners moving forward.

Why Are Investors So Excited?

There’s good reason for all of the excitement here. Keep in mind, Luby’s currently trades at a sub $2 per share level, and that’s after the dramatic gains that we saw in the stock today. However, the company said that it believes its assets are far more valuable.

In fact, LUB said in its press release that it expects for distributions to stockholders to be between $92 million and $123 million at the close of all transactions. That works out to between $3 and $4 per share.

The bottom line here is simple, if all goes well with the liquidation, investors have the potential to receive double the current value of their shares upon the close of all transactions. That’s a huge opportunity, making LUB stock one to consider!

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