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Tuesday I wrote about Sherwood Investments' 13-D filing (the first in the firm's history) indicating a 5.48% stake in Trans World Entertainment (NASDAQ: TWMC), the owner of mall-based music and entertainment stores including f.y.e., Suncoast, and Sam Goody.Obviously this lends a good deal of credibility to Sherwood's offer, but there are still a few things that investors need to wonder about.
The first, and most important question, is how many contingencies does the offer contain. If the offer is loaded with hedges and outs for Sherwood, it's a lot easier to dismiss it as blustering. If Sherwood's offer is contingent on the ability to secure financing and the Kansas City Royals winning the World Series, it's pretty easy to dismiss. How many contingencies does the offer have? It's hard to say because in the the 13-D filing, Sherwood actually contradicts itself:
On November 29, 2007, Sherwood sent a letter to the Issuer and the Special Committee, in which it made a preliminary proposal to acquire all of the Issuer's Common Stock not owned by Sherwood for $7.00 per share, subject to a due diligence review and complete and fair evaluation of the Issuer's business. A copy of that letter is attached hereto as Exhibit C.
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