Glentel Inc GLNIF

GLN remains dramatically undervalued!!!

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1. New product lines to generate more sales in 3^rd and 4^th quarters, Samsung and iphone 6/6+
2. Dividend yield is 5.22% of Friday’s closing price. Which is very high.
3. Impairment of intangible assets and goodwill till June 30,2014 was 24.987 million or $25 million approx $1.10 per share plus expansion/finance expenses of $3.251 compared to loss shown of $0.51 per share. In short if impairment does not exist, it would have shown $0.59 in profits during non-busy 6 months of the year. 3^rd and 4^th quarter are always busiest for GLN.
4. Write-off consists of Amortization of Property and Equipment, which is ($11.578 million or 0.51 per share added to $25 million Impairment of intangible assets and goodwill totals $36.6 million loss on paper for tax purposes only. Cash in hand or value is not affected but generated a handsome tax return for company ($1.67 million approx). Smart move.
5. Total number of shares as of 30 June were 22,284,065 and Repurchase of common shares under normal course issuer bid were 57,175 at total cost of $999,000. They can aggressively increase the buyback at current price from their $42.4 million cash in hand. Reducing shares mentioned in normal course issuer bid will raise share price to $15-18 and will cost $4-5 million.
6. Sale of Tower Sites and Satellite business generated capital gains
7. Write off goodwill from Australian business to mitigate gains resulting in 2 cents EPS for this year and $1.13 for next year.
8. In the second quarter of 2014, AMT received a 180-day notice from Optus that Optus was terminating its Australian Retail Managed Services agreement with AMT for the management of 45 Virgin mobile branded corporate stores. AMT will continue to operate 45 of Optus’ Virgin Mobile corporate retail stores through its Retail Managed Services business until the 4th quarter of 2014. Management’s test for impairment is based on cash flow projections to 2019. The discount rate used for AMT in management’s test for impairment as at June 30, 2014 is 31% or 15.505 million dollars (on paper or assumed loss) that includes 6.06 million for brand name, 8.07 million for vendor contract and 1,445 million for vendor agreements. As a result Company recorded an income tax recovery amount of $ 3,389 (saved on tax).
9. In 2012, the Company entered into a $167,321, 5 year syndicated credit agreement consisting of three credit facilities (Facilities A, B, and C) All credit facilities within the agreement are amortized over 10 years and mature in October 2017. All of the Company’s loans and borrowings bear interest at floating rates long-term borrowings related to Facility B and C at a rate of 3.93%. The interest rate swap matures in October 2017.
10. The company tried to consolidate all secured credit facilities A+B+C by $200 million unsecured note expiring 2 years later in 2019 instead of 2017 but found unsecured interest rates very high and terms unacceptable (current rate is 3.93% against unsecured rate of prime plus 5%-6% including fees that will only extend it by 2 years?? Till 2019 instead of current 2017). It looked after shareholders interest.
11. The Company announced that it is withdrawing its previously announced offering by private placement, of senior unsecured notes in the aggregate principal amount of $200,000,000(the “Notes”)due in 2019, and the related refinancing of its senior secured credit facility. The unsecured Notes offering was intended to opportunistically repay borrowings under the Company’s existing senior secured credit facilities and provide funds for general corporate purposes. While the proposed offering generated investor interest, it did not ultimately result in terms and conditions that were satisfactory to the Company. The Company intends to continue with its existing senior secured credit facilities that are currently in good standing, and which mature in October 2017. The Company will continue to periodically review other financing options that provide additional flexibility to the Company.
12. Growth forecast, which along with net cash values GLN $22 today.
13. Described in more detail below, these factors combine to reflect a massive undervaluation of GLN in today’s market, which we believe will not last for long.
14.  Therefore, given the persistently excessive liquidity of $42.5 million net cash on GLN’s balance sheet, we should ask Skidmore’s to present to the rest of the Board our request for the company to make a tender offer, which would meaningfully accelerate and increase the magnitude of share repurchases. Till June 30^th only $999,000 dollar worth of shares were purchased under normal course issuer bid.
15. I believe GLN remains dramatically undervalued. And I think the Board agrees. If they did not, they would not continue to repurchase shares under the existing authorization.
16. Now is a very opportunistic time to do so. I think a tender offer is simply a good method of conducting a large repurchase in an expedited timeframe, I am simply asking the board to repurchase a lot more, and sooner. I feel compelled to do so because I forecast such impressive earnings growth over the next few years, and therefore I believe Glentel is dramatically undervalued in today’s market, and the more shares repurchased now, the more each remaining shareholder will benefit from that earnings growth.
17. Now that iPhone offers a larger screen size, its price competitiveness in the premium phone market is clear, as a premium Android phone such as the Galaxy S5 and Note 4 sells at a similar price point to the iPhone 6 and 6+ respectively.
18. Apple ecosystem of products and services, which include iOS, iPad, Mac, Apps, App Store, iCloud, iTunes, and (more recently) Apple Watch, Apple Pay, Home, Health, Continuity, Beats. With the iPhone as the foundation, Apple’s ecosystem has come to play an important role in the daily life of Apple users, same is the case with premium Android Smartphone’s, such as Samsung’s Galaxy phones, supported by expert reviews and by the lines of people all over the world waiting to buy it. Apple’s ecosystem has come to play an important role in the daily life of Apple users, and Apple continues to make impressive strides to improve it,

 
Conclusion
I could not be more supportive of Skidmore’s and their team, and of the excellent work being done at Glentel, a company that continues to change the world through organic expansion. (1) Given the earnings growth during 2015-16, I continue to think that the market misunderstands and dramatically undervalues Glentel and (2) the excess liquidity the company continues to hold on its balance sheet affords the company an amazing opportunity to take further advantage of this valuation disconnect by accelerating share repurchases which currently is limited to less than 1 million dollars.