RE:RE:RE:RE:RE:RE:RE:Aimia Details Results of Common Share Substantial Issuer BidThe comments help to define perspective but:
-the longer term outcome is based on the
hope that the investment vehicle will succeed (contrary to the historical experience of the last few years).
-the longer term outcome is based on
expectations that the discount to NAV will decrease, which is contrary to most comparable scenarios.
-don't take into account that the value of the PLM entity will go down over time.
Before the Air Canada 2016 'announcement', some felt it was inconceivable that AC would use tactical threats to buy the loyalty unit on the cheap and that top management would outsmart Mr. Rovinescu. LOL. The valuation parameters for PLM will lie between Velocity (more on that below) and GOL-Smiles (much more towards the latter IMO) and will tend to gravitate towards a Multiplus-like multiple or worse over time. In terms of Aeromexico (directly or indirectly) buying PLM or Aimia and the financing required, take a look at the link below (the whole document is interesting but especially pdf pages 65-67 and 83).
https://www.morgans.com.au/morgans-assets/PDFs/Virgin%20Australia%20Notes%20-%20Prospectus.pdf
Quite frankly, if MIM et al can negotiate a PLM deal valued at 16.1x segment EBITDA (or a 14.0x, "post cost synergies"), I would be ready to pay these guys a 2-week all-included Caribbean vacation but, with reasonable reserves, I would submit that they apply value precepts that could work under selective circumstances but don't seem to have what it takes to capture the PLM value during this transition and that's why (I'm not sure this makes a difference) I send materials to different parties in order to build some kind of defence (floor in value) as Aimia is IMO relatively vulnerable at this point (buyback with an implied low 'Alexander report' PLM value lower than what MIM accounts for, fund redemption pressures to come etc) but pushback would be welcome here if I'm wrong. Leverage (as far as I can tell, need to dissect fleet financing from 'financial' debt) at Aeromexico is comparable to Virgin Australia (before debt incurred from the Velocity stake buyback) and that did not stop the Velocity buyback. Note that the 700M raised (of the 750M total) has an 8% interest rate to it meaning that the 35% stake has a "pro-forma" interest stripe to it of 56M compared to a segment 3-yr avg EBITDA of 46.3 and a segment 3-yr free cash flow of 42.2, implying that the value from the transaction will not come from interim cashflows but from the terminal value with a starting point at 16.1x EBITDA. Again, if they pull a Velocity buyback trick, I will amend and accept that they are great but I don't think this is a reasonable scenario. So, given the related access to debt for Virgin Australia and the incredible thirst for yield (the Velocity-related debt issue was increased due to significant demand), I don't think access to debt for Aeromexico would be a problem, especially given the absence of debt at PLM and the more reasonable acquisition parameters and related faster payback period. And Delta is there too.
And today, Aeromexico announced that they had settled with Boeing.
Looking for opposing views here but I don't feel like simply hoping for a good outcome with so many vultures circling around.