Alterra Power MGMXD

RE:The best analysis and projection of Alterra Power, ever.

[Harbinus]

This is a very good analysis, and he arrives at a similar intrinsic value figure that I had mentioned as my target as well.  

I don't think that his speculation about selling off all the company assets will ever come true, unless Ross Beaty has a major change of heart.  In the multiple interviews I've seen/read with him, he has been very clear that he is trying to make a long-term company for his kids, so I think that he's going to keep trying to grow Alterra instead of selling it off.  With over 30% of the outstanding shares, Ross Beaty is the one who can call the shots on the strategic direction of the company, as smaller shareholders we're just along for the ride.

The point he makes about refinancing the Icelandic debt to 6.5% in order to drive short-term free cashflow, doesn't really make sense to me, since on page 21 of Alterra's Q1 2015 results presentation they outline their debt repayment schedules and also say that the HS Orka debt has "weighted average interest rates of 0.9% – 4.4%".  Perhaps he is suggesting less principal payments upfront but a longer maturity and with higher interest rates, but that part seemed a bit unclear to me...   

Regardless, as we can see from his own projections and from the Alterra presentation, the payment schedule for the Icelandic debt is set to decline substantially between 2016 -2018, to the tune of $4.5 million.  That will be a nice boost to free cashflow of about a penny per share.

It's good to see Alterra getting some more attention, although I must say that I was kind of hoping for an additional movement down below $0.40 on the back of all this current market turmoil in order to to give a chance to buy some more under $0.35.  Probably just wishful thinking at this point...