Strategic ReviewHi All,
The news this morning is very dissapointing and the press release doesn't do a very good job of articulating the "challenges" around the termination. There is a lot of explaining that needs to be done and the press release is intentionally vague.
TMX - Demobilization & "Future Opportunities"?
The TMX termination also leaves a lot of questions about all the work that has been conducted to date and the de-mobilization of Macro's crews and equipment. Management is going to need to provide a more fulsome discussion on this. The press release also contemplates "future work" on the pipeline that are expected to "contractually occur" in early 2021 but we have no insight as to what this work would be.
Board of Directors - Strategic Review?
Within the last month the company has lost both the CGL and TMX work and we don't really know why in both of these cases. I think that the responsibility of the Board of Directors is now to perform a strategic review of the company and determine the path forward to unlock value for shareholders that has been depressed by the market. My opinion is that Macro either has a near term catalyst through a strategic review or faces a continued depressed share price (aka: dead money)
The share price has lagged book value for quite a while, let alone what many would consider fair market value. At a minimum, this strategic review should contemplate a sale of assets all the way to an outright sale of the company.
Gate City Capital - Shareholder Activism?
I am not sure of how active Gate City has been in the past; however, I think that this might be the time to dig into their "Activist Investor" toolbox. I also have noted that Undervalue appears to have a long established relationship with Macro's management and I would be interested in getting his perspective on this matter.
Sell Side Analysts - Dropping/Altering Coverage
The sell side community may end up dropping coverage of Macro or at least altering the valuation methodology to be as a discount too net book value as an earnings approach can no longer be used.
Humbly,
LR