TSX:CUS.DB.D - Post by User
Comment by
Roxy27on Jun 04, 2015 7:33pm
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Post# 23798862
RE:NATO SOLD - Wait for it $75M
RE:NATO SOLD - Wait for it $75MVery disappointing conclusion. They took a great little chemical company that paid a good dividend and sustainable debt leverage of 3X and turned it into a near 5x leverage stressed entity.
Back of knapkin:
pre-NATO EBITDA was $125 million
8X valuation equates to $1 billion EV
Less: net debt of $600 million after sale
Oustanding shares are 186 million
Equals $2.15 per share maximum in a perfect world.
In reality, without a clear path to deleveraging (which they don't have) their cost of borrowing will creep up and swallow the company over time. Company moral is low.
Their best option for shareholders now is a sale of the chemicals business.
My opinion,
Shares are fairly valued currently, certainly no upside over the mid/long term and material downside in the short term. Expect it to trade down to a $1 tomorrow.
Good luck.