Scotia comments"After years of having leverage concerns, the company now has excess cash to deploy. Our model assumes the company pays down some debt and buys back some shares. However, given the cash position and the ramp up of Tidewater Renewables' renewable diesel plant, it could be an opportune time to reconsider the overall structure of the two companies. This could include Tidewater Midstream acquiring the ~$93m public float of LCFS, which is quite illiquid.
"Tidewater is trading at 3.3 x 2024E EV/EBITDA, which reflects its refinery exposure, counterparty risk, small size, and share liquidity. We see considerable valuation expansion potential in the shares as the market becomes more comfortable with the renewable diesel facility ramp-up."
My arithmetic: Proceeds of $665 million less $75 million for maturing cv debs, less $45 million budget for stock buyback, less $30 million for investment opportunities, less $162 million to buy out LCFS minority (10.8 million sh X $15) leaves a balance of $353 million for debt repayment.