RE:RE:RE:Mittleman Brothers Q3 2019 Investor LetterJust in case Aeromexico is going after Aimia, as there seems to be a window of opportunity that would constitute a reasonable compromise, here are some relevant inputs.
The most relevant comparable is what is going on with GOL buying back the 47% it doesn’t already own in Smiles. The recent offer would put the market cap for Smiles at around 5.2B. With the trailing last four quarters’ EBITDA at 762M, this would imply a multiple of 6.8.
Applying this multiple to the trailing last four quarters’ adjusted EBITDA for PLM (85.2M USD) results in a total enterprise value of 377M CDN for the 48.9% interest held by Aimia.
Assuming negative drag from ongoing loyalty operations, tax issues, severance and liquidation costs being balanced by inflows from the last Cardlytics sale and potential upside on BIGLIFE and others.
If Aeromexico is going for a purchase of Aimia, here’s the consideration per share they should pay:
572M (equity at end of Q3 2019) -125M (cash used for buybacks in Q4) -236M (value of residual prefs at par) + 324M (value of PLM interest-53.2M recorded on balance sheet)= 535M. Given 93.84M shares after the buybacks ----) = 5.70 per share.
MIM needs a win and a reasonable win now is better than an uncertain win later.
For the largest holder of the stranded equity, there seems to be pressure (self-imposed) to liquidate and start anew but there are clearly potential misaligned interests between the OPM’s manager with the reported positions (stuck) and performance (in limbo) and the typical investor who should expect full par value realization in the context of, essentially, a liquidation scenario. This raises question along the ethical, regulatory and even legal spectrum in the context of fiduciary duty and fair dealings. The Rona acquisiton by Lowes is relevant.
GOL has recently produced some documents and has just signed a codeshare agreement with American Airlines and Aeromexico is testing the debt market.
https://www.sec.gov/Archives/edgar/data/1291733/000129281420000252/gol20200203_6k.htm https://www.moodys.com/research/Moodys-assigns-B1-CFR-to-Aeromxico-B2-to-proposed-notes--PR_416715?WT.mc_id=AM%7eWWFob29fRmluYW5jZV9TQl9SYXRpbmcgTmV3c19BbGxfRW5n%7e20200126_PR_416715&yptr=yahoo