RE:TMB earningsAlphaseeker1984 wrote: Tembec released its Q3 numbers and they are fantastic.
- 59mm EBITDA (with downtime for maintenance and share based compensation)
- 204mm LTM EBITDA
- All sectors contributing materially to EBITDA
This bodes well for RYAM if the deal goes through...which can be anticipated given the support of the Oaktree and Steelhead.
RYAM got Tembec at a bargain and today's numbers show that they will contribute significant EBITDA to the combined entity. RYAM's numbers will be out next week so we can do some number crunching once we have color on RYAM's market in Q2.
With regards to TMB's numbers it is clear that the Forest Products business is a valuable asset and once the dust settles on the lumber dispute they will be able to sell the busness for a premium. SC is continuing to show robust margin expansion and it can be anticipated the this continues for a while as China's agricultural policy shifts away from cotton subsidies.
RYAM shareholders should be very pleased to see these numbers.
Nice work Alpha!
One would have to assume that RYAM BOD knew about the latest TMB earnings in order to substantiate the 17% increase in the offering. As Dosperros mentioned, they could not come out and say they were not paying any more, and then follow up a few days later saying, OK.. we will pay more! This TMB earnings report is the cookie that will justify to current RYAM shareholders why they wrote a bigger cheque. So all good on that front!
What I find shocking is that OakTree and Steelhead have both publicly stated they would support the new deal and vote yes..... but if the lumber asset could be worth $400 million based on WFT takeover of Gilman, and LTM EBITDA earnings INCREASE from a predicted $170 million to $200 million+, could they not reverse their position and say no again? Obviously with the TMB Earnings release and the Gilman deal, TMB is still undervalued at $4.75 per share! Or am I missing something?
What I also don't like about the deal is the 67 and 33 split. My preference would just be 100% shares in RYAM so I don't have to play guessing games as to value of what RYAM stock will be before the conversion. What do I do with the 67% cash?? Like last time, I guessed and sold 100% of my position of TMB to buy RYAM. In the end, I reversed that decision and sold my RYAM shares to buy TMB again (because we could see the deal was going to be voted no). Although I managed to sell RYAM for a profit based on share price, I actually broke even because I lost on the FX exchange rates at the time of my trades.
So, IMO, still interesting times ahead. This time around, I won't sell before vote, unless TMB shares trade above the $4.75 value. I like to use some technical indicators for making trades and with RYAM being more liquid, the t/a becomes more reliable with volume indicators. So that part is good. However, I currently see a flat trend in the 6 month RYAM chart where the market is awaiting a catalyst to give it some direction... that catalyst could be RYAM earnings next week, where the fundamental guys like Alpha work their magic and make predictions based on the earnings of the 2 companies together...
So for now, I will hold my TMB position and will wait and see what happens!
Good Luck all!
FI4