Technology Solutions Company Liquidation

On February 10th 2009, the Board of Technology Solutions Company (TICKER: TSCC) approved a Plan of Complete Liquidation and Dissolution of the business, subject to shareholder approval at a yet to be determined special meeting of the shareholders. According to the plan of liquidation, the Company will make an initial liquidating distribution of $2/share in cash upon shareholder approval. The initial liquidating distribution will be distributed from outstanding balances of the firms investment account held at the Harris Bank in Chicago. Moreover, the company plans to monetize its remaining of non-cash assets (primarily accounts receivable and outsanding notes from the sale of certain business subsidiaries), and to the extent possible make additional liquidating distributions to the shareholders. According to Section 3(f) of the plan, the Company estimates that the net realizable value of its assets available for distrubution net of applicable liquidating expenses is approximately $6,350,000, or approximately $2.47/share. The Company's stock currently trades for $2.12. Therefore, a fairly attractive risk arbitrage opportunity seems to be available in the Company's stock. In the best case scenario, you can buy the Company's stock for $2.12, and receive an initial liquidating distribution of $2.00/share, followed by an additional liquidating distribution of $0.47 in, say, a year, a situation yielding an annualized return of approximately 16.5%. In the worse case scenario, you buy the Company's stock for $2.12, receive the initial liquidating distriubution of $2.00/share, but do not receive any additional proceeds from the monetization of its non-cash assets, thereby effectively limiting your downside to approximately 5.6%.