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Bullboard - Stock Discussion Forum NEWALTA CORPORATION T.NAL

"Newalta Corp provides engineered environmental solutions that enable customers to reduce disposal, enhance recycling and recover valuable resources from oil and gas exploration and production waste streams."

TSX:NAL - Post Discussion

NEWALTA CORPORATION > Value range $1.54 to $2.15 in other estimate
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Post by sculpin2 on Mar 01, 2018 9:41am

Value range $1.54 to $2.15 in other estimate

Altacorp's take on the Tervita/Newalta merger...

A big headline M&A transaction of note this morning in the combination of Newalta (NAL, $84 mln mkt cap, Not Rated ($429 mln EV); CDN oilfield waste disposal co.) and Tervita Energy Services (Private, not rated, large CDN Oilfield and Industrial waste and environmental company).  Would take this as a positive for the sector in general  -Secure Energy Services (SES, Not rated reports after market today. Conference Call @ 11AM ET: Dial-in Info: 647-427-7450 or 888-231-8191
·         Highlights
o   New Tervita will be a publicly traded entity.
o   Pro forma 2017 revenue and EBITDA are expected to be $2.6 bln and $201 mln ($245 mln after giving effect to $40-$45 mln expected synergies).
o   Pro forma total debt/EBITDA is expected to be roughly 3.6x; We calculate that total debt for the proforma entity will be roughly $725 mln.
o   Current NAL shareholders are expected to own 11-13% of New Tervita, depending on the extent that warrants are exercised.
o   Deal requires 66.67% approval from shareholders of both NAL and Tervita.
o   New Tervita will retain Tervita’s current management team.
 
·         Mechanics of the Deal
o   NAL shareholders will be offered 0.1467 New Tervita shares plus 0.0307 warrants to purchase 1 New Tervita share at a NAL equivalent price of $2.75, NAL shares are currently trading at $0.95 (exercisable for 2 years).
o   @ an assumed 10x EV/EBITDA multiple, 11% ownership in the combined entity, and full credit for synergies, implied value per NAL share is roughly $2.15/share (126% premium).
o   @ an assumed 8x EV/EBITDA multiple, 11% ownership in the combined entity, and full credit for synergies, value per NAL share is roughly $1.54/share (62% premium).
o   Secure (SES-TSX) is trading at roughly 10x 2017 consensus EV/EBITDA, and 8.6x 2018 consensus EV/EBITDA.
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