SOURCE: Millennium Investment and Acquisition Co.

Millennium Investment and Acquisition Co.

August 22, 2017 06:00 ET

Millennium Investment & Acquisition Company, Inc. Announces Updated Valuation of $11.6 million for Investment in SMG Global and updated Investor Presentation

Improved SMC Global financial performance leads to increased valuation as it progresses towards potential Initial Public Offering

Updated Investor Presentation Indicates Discount to Valuation of 61%

NEW YORK, NY--(Marketwired - Aug 22, 2017) - Millennium Investment and Acquisition Co. Inc. (OTC PINK: MILC) today provided a corporate update on its investment in SMC Global and announces that it has updated its investor presentation which is available on its website (www.millinvestment.com).

SMC Global
SMC Global Securities Ltd. ("SMC Global") is a financial services firm headquartered in New Delhi. Its products and services include institutional and retail brokerage, equity and commodity research, equity, commodity and derivative arbitrage and trading, on-line trading services, investment banking, custodial services, clearing services, distribution of mutual funds, IPOs and insurance products, and wealth management services. SMC Global has a significant platform across India covering over 500 cities with more than 1.6 million individual clients, a network of over 2,400 sub-brokers. MILC believes SMC Global represents an attractive platform in the rapidly modernizing India economy.

As previously disclosed, MILC has entered into a Right to Sell Agreement (the "Right to Sell") with the "promoter group" (management) of SMC Global pursuant to which MILC will have a right to sell 100,000 shares of SMC Global back to the "promoter group" of SMC Global on the first day of each month commencing with April 1, 2016 continuing until SMC Global completes a qualified public offering and listing on either a primary stock exchange in India or the Unites States. The purchase price will be the Fair Market Value of the stock at the time of the transaction. There can be no assurance the "promoter group" will comply with their obligations related to the Right to Sell Agreement.

To date, pursuant to the Right to Sell, MILC has sold 1.7 million shares for total proceeds of $2.1 million, which translates to an average price of $1.24 per SMC Global share. This translates to cash generated of approximately $124,000 per month on average. In addition, MILC's tax basis is $2.94 per Global share. As such, MILC is establishing a Net Operating Loss which has potential value related to future tax exposure. For example, if MILC were to liquidate its entire remaining position at the average price it has sold stock to date, it would establish an NOL of approximately $20 million.

MILC currently owns 11,904,690 shares of SMC Global. Effective June 30, 2017, MILC today announces it has established a value of $0.98 per SMC Global share which translates to a total value of its SMC Global holding of $11.6 million. The value represents a private value/liquidity discount to the average sales price of $1.24 per SMC Global share that has been paid pursuant to the Right to Sell which would value MILC's position at approximately $15 million. MILC believes that the discount is warranted based on a private company/liquidity discount and the fact that there can be no assurance as to the continued performance and pricing for the sale of stock pursuant to the Right to Sell or the ability to sell MILC's entire remaining position and at what price. Having said that, MILC acknowledges that its valuation may prove conservative since the management of SMC Global is purchasing the shares at what it believes to be "Fair Market Value" and they hope that it will complete a public offering at an even higher valuation in the near future.

In arriving at the valuation of SMC Global, MILC focused on two primary valuation metrics (Trailing PE multiple and Price to Book Value ratio) of a peer group of India based financial services companies as provided to MILC by SMC Global. The following is a summary of the information regarding the peer group:

             
    P/BV (x)   TTM P/E (x)   Mcap (INRs  Mn)
Company Name   FY16 FY17        
Edelweiss Fin    4.7  4.1   21.5x    174,876
Motilal Oswal    11.2  9.1   -    161,460
IIFL Holdings    5.6  4.3   18.5x    190,233
Geojit Fin. Services    5.1  4.9   25x    25,171
Emkay Global    3.2  2.9   16x    3,971
               
    Average  5.1   20.25    
               

The following is a summary of historical annual performance of SMG Global:

     
    FY Ended
    3/31/2013   3/31/2014   3/31/2015   3/31/2016   3/31/2017
                             
Revenue   53,635   50,372     61,240     61,136     75,551  
Expenses   50,096   46,468     52,940     55,322     68,486  
Net Income   3,539   3,921     8,300     5,814     7,065  
                             
                             
Revenue Growth       -6 %   22 %   0 %   24 %
Net Income Growth       11 %   112 %   -30 %   22 %
                             

MILC has established a trailing PE multiple of 18x and 2x book value as appropriate valuations metrics and has established a weighting of 80% PE and 20% P/BV. The following summarizes the methodology for establishing the valuation of MILC's holdings in SMC Global:

   
Valuation Based on Multiple of Net Income  
  TTM Net Income 7,065,000
  Valuation Multiple 18.00
  SMC Global Valuation 127,170,000
   
Valuation Based on Book Value  
  Assets 242,658,000
  Liabilities 151,375,000
  Book Value 91,283,000
  Book Value Valuation Multiple 2.00
  SMC Global Valuation 182,566,000
   
Weighting of Valuation  
  Valuation Based on Multiple of Net Income 80%
  Valuation Based on Book Value 20%
  Valuation 138,249,200
  SMC Shares Outstanding 113,134,450
  Valuation per SMCG Share 1.22
   
MIAC Valuation  
  Shares Held by MILC 11,904,690
  MIAC % Ownership 10.5%
  Liquidity Discount 20%
Valuation of MILC Position 11,637,933
  Value per SMCG Share 0.98
  Value per MILC Share 1.06
   

SMC Global has notified MILC that it is pursuing an initial public offering ("IPO") and listing in the United States. There can be no assurance as to when or if such an offering will be completed as well as what the ultimate price per share will be if the IPO occurs.

Updated Investor Presentation and NAV Calculation
MILC announces today that it has updated its investor presentation on its website (www.millinvestment.com). As part of this, MILC has updated its estimate of its Net Asset Value (NAV) to $2.81 per share which is summarized below:

             
    Estimated     Value per  
    Asset Value     MILC Share  
    (Unaudited)     (Unaudited)  
             
Cash   2,600,000     0.24  
MHC (a)   16,600,000     1.51  
SMC (b)   11,600,000     1.06  
Short term solar construction loan   460,000     0.04  
Other Current Assets   65,000     0.01  
Current Liabilities   (545,000 )   (0.05 )
             
Net Asset Value (NAV)   30,780,000.00     2.81  
             
Equity Market Capitalization (8/21/17)   12,055,795.40     1.10  
             
Discount to NAV   60.8 %      
             
MILC Shares Outstanding   10,959,814        
             
Notes            
(a) Valuation is based on third party appraisal as of acquisition ($13.9 million) plus capital expenditures to date.  
   
(b) SMC valuation is based on MILC's estimate of value for SMC.
SMC's valuation for MILC's position is $15 million which would add approximately $4.3 million to NAV which is $0.31 per share.
There can be no assurance as to if and when an IPO of SMC shall occur.
 
   

About Millennium Investment & Acquisition Company Inc.
Millennium Investment and Acquisition Co. Inc. ("MILC"), formerly Millennium India Acquisition Co., is an internally managed, non-diversified, closed-end investment company. MILC currently holds a minority interest in SMC Global, an Indian financial services company, consistent with MILC's past investment strategy focusing on Indian investments. MILC now principally focuses on new investments in alternative energy. Consistent with this new strategy, MILC now owns an Activated Carbon plant in Hawaii and is actively seeking to expand its portfolio.

MILC essentially owns two assets (in addition to cash available for investment):

1) 10.5% of SMC Global - an India based financial services company
2) Millennium Carbon which owns an Activated Carbon plant located in Hawaii that produces a premium grade Activated Carbon for use in advanced energy storage.

Investors in MILC can gain financial exposure to India and Alternative Energy which are both attractive sectors for asset allocation.

www.millinvestment.com

About SMC Global
SMC Global Securities Ltd. ("SMC Global") is a financial services firm headquartered in New Delhi. Its products and services include institutional and retail brokerage, equity and commodity research, equity, commodity and derivative arbitrage and trading, on-line trading services, investment banking, custodial services, clearing services, distribution of mutual funds, IPOs and insurance products, and wealth management services. SMC Global has a significant platform across India covering over 500 cities with more than 1.6 million individual clients, a network of over 2,400 sub-brokers. MILC believes SMC Global represents an attractive platform in the rapidly modernizing India economy.

www.smcindiaonline.com

http://www.smctradeonline.com

About Millennium Carbon
Millennium Carbon is a manufacturer of premium Activated Carbon that is attractive for energy storage. Millennium Carbon processes macadamia nutshell feedstock to produce Activated Carbon through a two-stage pyrolysis and steam activation facility located in Kawaihae on Hawaii Island. The plant can process upwards of 12,000 tons of macadamia nutshells per year.

Activated Carbon is a highly porous substance that confers benefits in various industrial and consumer applications including in filtration, emissions, and pollution remediation. Millennium Carbon's premium grade Activated Carbon has unique properties that make it particularly attractive for the manufacture of Ultracapacitors, an advanced energy storage device with significant benefits relative to conventional batteries.

www.millcarbon.com

Cautionary Statement about Forward-Looking Statements
This document includes forward-looking statements within the meaning of the U.S. securities laws. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as statements containing the words "believe," "expect," "will," "anticipate," "intend," "estimate," "project," "plan," "assume", "seek" or other similar expressions, or negatives of those expressions, although not all forward-looking statements contain these identifying words. All statements contained in this document regarding our future strategy, future operations, future prospects, the future of our industries and results that might be obtained by pursuing management's current or future plans and objectives are forward-looking statements. You should not place undue reliance on any forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control. Our forward-looking statements are based on the information currently available to us and speak only as of the date of the filing of this document. Over time, our actual results, performance, financial condition or achievements may differ from the anticipated results, performance, financial condition or achievements that are expressed or implied by our forward-looking statements, and such differences may be significant and materially adverse to our security holders.

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