RE: RE: RE: RE: RE: Earnings OutI am betting there is a buyer but I doubt the premium to the common would be much.
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Interesting exercise trying to figure out a buy price for Arctic Glacier. The buyer would want to pay off both the senior lenders at $180M plus 4% (original prepayment fee) plus another 3% (new prepayment fee) = $192M and pay off the convertibles at $100M.
Free cash flow from 2010 was $48.9M gross profit plus $32.4M amortization minus about $5 million in taxes and I will guess high at $15M for maintenance capital expenditures. This leaves free cash flow of $60Million per year.
The best buyers would be a competitor but with all the anit-trust stuff that just went on that might get complicted and they only have 4 months. I have to assume many other buyers would be interested in their free cash flow, since the business of making ice cannot be that complicated. I do it in my freezer all the time with a very good yield.lol.
So to buy this thing you need to pay off $292million in debt and you do need the common shareholders to agree. The good news here is every $1 you give to the common only adds about $42 million to the price. I am going to guess at $2.60 to the common, if for the only reason that perhaps the senior lenders know the offering price and found $3million a nice round number to recieve for their warrants and hence demanded the $1.60 exercise price.
Add $108 million for the common shares and you have a purchase price of $400 million. The free cash flow yield on that investment would be 15% (60M divide by $400M). I am pretty sure that the common price will not be higher then that and as you get closer to $1.35, which is today's price, you get closer to the common shareholders turning down the deal. Basically taking their bat and going home sulking. If they are not going to play then no one else is. Can't really have that, not with only 4 months left.
So my new guess makes my initial statement wrong and that the premium to the common could be substantial at over 90% to yesterday's price. Still too risky for me to participate in but if I owned the shares I would hang on to them just to see what happens. This is where my guess is leaning. Price may be as low as $2, but still a good premium.