RE:RE:RE:RE:RE:RE:Takeover/Way Undervaluedhockey: There would also be penalties for payout the loans that were not considered.The seven year loans you are not going to be able to walk away form by just paying out 8% on a simple interest calculation for a year. We are not talking paying off your credit line, some are secured and some are unsecured loans. bet it would probably be closer to a $1Billion than $272Mil with penalties and with the questionable assets then it just becomes more speculative. Your ROE reminded me of Donnville when he ranted about the ROE on Valeant and Concordia in the fall. Many got suckered in then.
LaticelnExile wrote: The Guarantor's rights, subordinations and mitigation obligations are complex within the 197 page Creditor document. A white knight will not rescue Concordia's debt obligations by paying 8% interest on debt that is greater than the companies assets. The company is distressed and PE have priced out the assets ruthlessly. With North American revenue declining and showing continued erosion expect more imipairments because they have a far too length amortization period for their drugs which is propping up EBITDA. Considering their underperformance consolidated revenue will have to be lowered. There isn't a strategic advantage for PE to do a leveraged buyout on a leveraged buyout There is no possible way (aside from a magic trick) that new purchasers can get a positive return, never mind the 12.4% return that you have flaunted. If they did PE wouldn't have run from the data in April 22 when the first "rumours" of a buyout surfaced (and incidentally when the CEO pleged his shares against debt - and there is not a CEO on the face of this Earth who pledges his shares because he thinks the stock price is going up on a takeover offer.) Furthermore, the path just got more treacherous for Concordia since April when they put the company up for sale. PE will scavenge the assets in CCAA or BIA, there are only two options here because the company is not viable and the shorts have known this for some time.
Hockeyz wrote: Lati: The credit and guarantee agreement you posted are all part of the $3.4 billion in loans outstanding. The USD term loan has $1.03 billion US outstanding, the pound sterling loan has $637M US outstanding and the revolver is zero as it has not been drawn on as per Note 11 in the June'2016 financial statements. The $220M earnout is also included inthe $3.4 billion in loans as per Note 18.
What I am saying is even if the purchasers pay $16 per share for CXR (double the current price) and pay off all (100%) of the debt of CXR so they are debt-free (and therefore there would be not interest on the debt), the new purchasers would still get a very good 12.4% return on their $4.2 billion investment.
Alternatively, if the new purchasers did not pay off any of the debt (then there would continue to be interest on the debt), their yearly return on investment would be 30% ($4.81 per share of earnings divided by $16 purchase price of shares). Either way looks like a very good return for the purchasers, combined with filling up their drug pipeline and 60 new drugs in the next few years.
I do not know where you get the $2.2B of assets from. All I am going by is the earnings expected in the future to determine the return.