Post by
lumpy13 on Oct 14, 2022 4:51pm
Enlightening Webinar
If you haven't watched it, watch it.
David Austin, CEO, co-founder succeeded before with selling Western Coal at a high price (in retrospect, the buyer overpaid and went bankrupt). He wants to repeat the model with CAD, but is clearly getting frustrated, and under shareholder criticism, as Covid basically set back the timetable for the sale 2 years.
From all appearances, Austin had no real desire to present and discuss the company, strategy and timetable (the latter which he said his lawyers told him he couldn't discuss), but implied - at least for me - that he thinks a sale could be within a matter of months. 10-20 interested parties have access to the data room. Sooner than later a company will make an offfer, as CAD's properties are among the best undeveloped met coal deposits. Austin will then open it up to bids from other parties, with the objective to elicit the highest bid.
My sense is that a sale will be at a 2-4x (or more) of its current shareprice as the company is tightly held and the share price doesn't reflect what the coal deposits are really worth. Once one offer is made, others will need to bid if they want - as so many steel companies need - to acquire the good met coal for future growth/survival. (He kept insisting he's looking at an asset sale, not a sale of the company. I didn't fully understand the logic, but he said he wants/expects to be around for the next few years to help the acquirer transition the deposits toward developmentt, The key incentive is that he owns the biggest piece of a 1.5% royalty. Plus, given all the permitting needed he's already been involved with, the acquirer needs him around, given that its most likely to be an Indian, Chinese or Japanese buyer. I guess shareholders would be rewarded with a special dividend?)
Given how shareholder unfriendly that CAD is, as Austin just wants to be left alone and do the deal, he sees no need to keep shareholders informed and hated making the presentation and answering questions. Strange guy, but I'm betting he'll succeed. I started buying in late '20 (so up around 50%, with a signficant position) but keep asking myself if I should buy more as this could be a big win in a short time.
Opinions welcome.