RE:RE:RE:Update from Leonard
This is the weirdest situation I have seen in a while.
(All in USD)
Company should have a bit over $17M in unrestricted cash before the business closing in mid March.
PP&E of $10M (20% over BV) Evergreen sold the Tukwila property in 2017 around 30% over BV. In 2016 Evergreen acquired the Lakewood property(per option). Independent appraisal "value on the property at an attractive premium to the acquisition price". So I think the $10M PP&E is rather conservative.
Debt: $4.9M
Liquidation value= $17M + $10M - $4.9M = $22.1M
Marketcap: $17.5M
That's a negative value of $-4.6M!
Cash burn because of business closing: My rough estimation is 550k per months (make it $1M to be very conservative) cash burn.
Business after reopening: might be slowing down for a while, but most costs are variable (labor, food, etc.). So as soon as Evergreen reopens, the low cash burn should stop.
How long until a soft re-opening? I estimate 1-3 months.
I estimate conservative earnings (deep recession?, impact on higher minimum wage law, betting law will be upheld and patrons will visit tribal casinos more, etc.) $2M to $4M. These earnings are next 12 months after re-opening.
Valued on conservative earnings: Enterprise value/Earnings in the range of 2.8 - 1.4
My point is, the price does not make any sense unless (a)the business was a fraud all along, (b) the business never re-opens again, or (c) the business will transform from a capital light, cash producing top tier small casino (two of the top four are Evergreen card rooms in 2018-19) to a money losing business.
What am I wrong about? What do I miss?
Thanks in advance.