ABCP | What A Year Its Been For AmBase Investors

ABCP Stock, AmBase, AmBase Corp.The first trading session of September is always significant, but one year ago this week, AmBase Corp. (ABCP) investors were in for a ride worth waiting for. At 11:31:09 am on September 1, 2011 the Company filed an 8-K with details of  Judge Loren Smith’s ruling regarding damages due to the Company which sent ABCP stock skyrocketing from the 0.35 open to as high as 1.85 before closing up 309.68% on volume of 2.5 million shares.

Well, almost exactly one year later, at 12:46:10 pm on August 31, 2012, the final ruling came and excitement again surrounded the Greenwich, Connecticut commercial office building operator.

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ABCP, AmBase corp., AmBaseABCP Stock Chart

Market Cap: 112.86M
Close: 2.62, up 0.77 (41.62%)
Volume: 3,694,672
Dollar Volume: $9,026,871
High: 2.64
Trades: 646
Average Trade Size: 5,719
Authorized: 200,000,000
Issued and Outstanding: 43,075,410

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Ambase used to own an insurance company and a savings bank which is where the litigation stemmed from. In February 1991, the Company sold its ownership interest in The Home Insurance Company and its subsidiaries and later lost Carteret Savings Bank, FA on December 4, 1992 when it was placed in receivership by the Office of Thrift Supervision. This is where the story line begins.

Ambase intelligently decided not to make an election pursuant to final Treasury Reg. §1.597-4(g) to disaffiliate Carteret from their consolidated federal income tax return effective as of December 4, 1992. The Company made multiple requests to the RTC/FDIC for tax information pertaining to Carteret and the resulting successor institution, Carteret Federal Savings Bank, but were never provided with it. Since they continued to carry Carteret on their books for federal income tax return purposes, they would be privileged to Net Operating Losses which could be available to carryforward/carryback into various federal income tax return years.

With the notion that any Carteret FSB federal income tax returns filed by the FDIC were improperly filed and are neither accurate nor valid, the Company estimated that, as of December 1992, it had a remaining tax basis related to its investment in Carteret/Carteret FSB of approximately $158 million based on information received and prior to the recognition of the 1992 tax losses reflected on the Company’s 1992 amended federal income tax return.

Well, one year ago, on August 31, 2011, Judge Loren Smith (“Judge Smith”) of the United States Court of Federal Claims issued a damages opinion in the Company’s Supervisory Goodwill legal proceedings directly awarding $205,013,000 in lost value expectancy damages, plus tax gross-up if applicable. this past Friday, August 31, 2012, AmBase signed the settlement agreement which provides for the payment by the U.S. directly to AmBase of $180,650,000, along with a federal tax gross-up, to be paid in a lump sum.

The Board of Directors of AmBase, which now includes Ms. A. Halloran who owns 16,000,000 shares of ABCP stock, is considering to declare and pay a special cash dividend of between $1.50 and $2.00 per share possibly before the end of this year. This would seem like the end of the road since Ambase’s Federal income tax refund suit on Carryback Claims got knocked back on May 23, 2012, when the Court issued an order denying the Company’s Motion for Partial Summary Judgment and further stating that the Company would not be entitled to recover a tax refund.

About ABCP Stock

AmBase Corporation, through its subsidiary, owns, operates, and manages one commercial office building in Greenwich, Connecticut that contains approximately 14,500 square feet.  The Company utilizes approximately 3,500 square feet for its executive offices; the remaining space is currently unoccupied and available for lease.

Click here to view the SEC filings for ABCP.

Bottom Line: Who knew ABCP would be such a smart penny stock to park money into a year ago. Once the expected one-time dividend date is declared, you can expect ABCP stock to basically fizzle away since there is no further motive for holding the shares. Until then, it will be a great swing trade even though the range is going to be tight since t has the liquidity within it.

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