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Itafos Inc V.IFOS

Alternate Symbol(s):  MBCF

Itafos Inc. is a phosphate and specialty fertilizer company. Its businesses and projects include Conda, Arraias, Farim, Santana and Araxa. Conda is a vertically integrated phosphate fertilizer business located in Idaho, United States with a production capacity of over 550 Kiloton (kt) per year of mono ammonium phosphate (MAP), merchant grade phosphoric acid (MGA) and ammonium polyphosphate (APP), and approximately 27kt per year of hydrofluorosilicic acid (HFSA). Arraias is a vertically integrated phosphate fertilizer business located in Tocantins, Brazil with a production capacity of approximately 500kt per year of single superphosphate (SSP) and SSP with micronutrients (SSP+). Farim is a phosphate mine project located in Farim, Guinea-Bissau. Santana is a vertically integrated high-grade phosphate mine and fertilizer plant project located in Para, Brazil. Araxa is a vertically integrated rare earth element and niobium mine and extraction plant project located in Minas Gerais, Brazil.


TSXV:IFOS - Post by User

Bullboard Posts
Comment by kisstopherpon May 17, 2015 7:04pm
219 Views
Post# 23737699

RE:RE:RE:Distressed Acquisitions

RE:RE:RE:Distressed Acquisitions
LeMarcus wrote:
supra48 wrote:
MBAC2014 wrote: A recent study by two finance professors from London Business School. 

"We study 21,849 completed US acquisitions announced over the period 1982-2012 for
which the transaction value is at least 1% of the size of the acquirer. Four hundred and twenty
eight of these transactions involve a distressed target....Firms that buy distressed and bankrupt companies or some of these companies’ assets earn excess returns."

In other words, big players in the industry do have incentives to acquire firms like MBAC. 

Furthermore, valuation methods for financially distressed firms are extensively discussed and tested; the book value of equity is NOT a significant factor at all.

The MBAC case provides an example to illustrate why accounting numbers are less relevant. The financial expenses would have been recorded as assets if the firm had not announced the maintenance mode.

"Prior to January 7, 2015, the Company capitalized interest expense and amortization of deferred transaction costs relating to the Itafós Arraias SSP Operations as property, plant and equipment, ...... Effective January 7, 2015, the Itafós Arraias SSP Operations has been placed under care and maintenance ......accordingly (such expenses) are recorded as “finance expense” in the consolidated statement of operations." 

The loss number of Q1 is horrible, but it is mainly an accounting choice.

The USD / BRL exceeded 3.30 in March, which resulted in significant unrealized foreign exchange loss. But on the other hand, it is REALLY good news for producing fertilizer in Brazil.

 

Very good post mbac2014, there is a timely new article on junior mining buyout clues on pinnacledigest.com that compliments your post. Sorry I can't copy a link I'm on my phone.



What approach would a buyer retain to submit a binding proposal?

 

1. Discounted Cash flow + intrasic value ( hybrid valuation since not in commercail production)
2. Premium to market value (hard to convice share holders to take 30% premium on 10cents)
?
Any clues from your scientific readings?
 



FYI - Allana potash sold for 140 million+. representing $50 million per 500T/year. No plant and a premium to the book value everyone is so concerned about. Eauity was only at 109 million.

MBAC will sell on reserves valuation, the plant is the bonus. 

or they could sell Santana for $30+ million and use it to ramp up Itafos  

Bullboard Posts