Post by
greatplay on Nov 26, 2016 7:24pm
Summary and my take on
There's chess game occuring now, I'm good with it, and here's my take on...
Former CEO tried to sell the company, but couldn't find buyer, because company's debt is too big and there's a deteoriating revenue on US side, so Financial companies that make money on buying and then flipping companies walked away.
US Revenue continued to slide (last quarter was really bad), personally I hated it, but UK revenue was OK, legacy drugs business went up, but it's too small size of company's pie.
CEO can be a king or queen, it behaved like a king (chess has both pieces); kings in chess are really weak, but queens are most powerful piece on a board, but now we got new CEO, hopefully it behaves more like a queen.
Game continues on and player(s) behind Concordia is Goldman Sachs along with RBC, etc
The player decided to keep status quo and devalue bonds' values, which will result in smaller debt.
Everyone on short side talks about shareholders, but we are nothing to them, we represent 150MLN, which is nothing in comparison to 3.2BLN debt. Shareholders took haircut. Nobody has concern about us, except shorters on the board, who are playing dangerous game, yes, we can go down 100%, but it stocks goes to $5, it's also 100% to shorters loss, if it goes to $10, 200%;
It can happen on acquisition, let me talk about it too....
New CEO will be talking to bond holders and will try to figure out what haircut will be acceptable to them and how low company can shake them down to.
Then based on it, company's valuation will change, all bondholders will get 50c on $1; it will put debt valuation at $1.6 BLN, + payouts and other amounts = 1.8BLN
UK business was bought for 3.5 BLN US
Let's say Concordia overpaid 30%, that puts it to 2.45BLN, but most companies when they try to buy another will overpay some amounts.
Some say that Amco, is blah...blah, but in reality it's big pharma company with many products and company that will launch more in coming couple years.
Amco ownership, is the primary reason why Goldman organized 330MLN notes, it's valid business with good cashflow...
We talked about UK business, which is worth at least 2 BLN, but then there's still shrinking US business, at certain point with new leadership, it will stabilize. How?
1st step that I see coming from CEO is re-arranging access to CVS; I'm sure the CEO can make it happen, he was TEVA Americas president, if he can't directly, I'm sure he plays in golf with someone who knows CVS president.
CVS access will put a bottom on US market, with botton in, it will be worth half of UK; maybe a bit less; 0.5 to 1.2 BLN
What do we have: 2.5 to 3.5 BLN company's worth;
1.8 BLN was debt;
If you sell even for 2.5BLn, that represents 700MLN, 4.5 times of current value; 4.5 x 2.5 = 11.25 share price... Here's 400% loss for shorts, so shorts, you should be afraid the same way...