RE:RE:RE:RE:RE:RE:MT needs to go Plain and simple....That is true Craig. But if fraud is not being committed here and guidance is confirmed above $500M then there will inevitably be a short squeeze.
All the below options assume no fraud and $500M EBITDA in 2017 - but do not get me wrong the market is implying that either fraud or below $500M in 2017 guidance is coming I realize that and know that we may very well find ourselves with a nail in the coffin NR.
Option #1: Organic growth Between the next two quarters and full year 2017 there will be $300M in positive cash flow after paying taxes and interest and CXR currently has $145M in cash. That equates to $8.72/share within 1.5 years alone, or 130% above the current PPS.
Option 2: Buyout Buyout. As I said previously I do not believe a buyout premium would be in excess of 35%-65%, however, a premium on the high side of that threshold could still be extremely lucrative due to the organic growth that is waiting for a patient investor [see option 1].
Option 3: Merger Merger of equals with a cash rich biotech company - this would provide liquidity to CXR + a drug pipeline while providing the biotech company with an international distributor that flows $200M+ in positive cash flow.
Option 4: Private Placement Private equity takes a majority stake in CXR at a 30%-50% premium to the PPS. This would be highly attractive to a PE firm because as opposed to a buyout, whatever money they provided would not go to shareholders but instead to deleveraging CXR.
Craigbad wrote: The difference here is it is unlikely to have a v shaped recovery. Its going to take a LONG time to get the debt to ebitda below 5 to get the big money back in and everything has go right. Keep in mind that there are alot of potential problems on the horizon that could send the ratio higher.
colt451 wrote: Well this is one of the first posts I've read of yours that I can actually agree with so I suppose we have some common ground lol.
Apart from funds like Ackman's or Point 72 yeah, the majority of funds cannot invest in a Co. like CXR due to their leverage or alternatively, because they are now a "small cap" and close to becoming a "micro-cap." The index selling is a cherry on the cake as it allows shorters to front run into the deletion and then buy back the shares the following week.
There is not really an exception for commodities, that is why you saw massive drops in the oil and copper sector with v shaped recoveries. Once the commodity prices rose and re-established investable guidelinese money flowed back in.
At this point I am simply underwater to the point that the risk/reward profile favours holding until the strategic review is complete. But if I was new money I would not buy, or if I was down 10-25% I would have sold today in all liklihood. That is probably another factor in driving the price down - no one is going to touch this until there is some certainity.
Craigbad wrote: You seem like a nice guy colt, and i appreciate that you actually put some math to your numbers although we differ in opinion. I would call this a long squeeze, not a bear raid. Once the debt to ebitda goes well beyond the danger zone alot of funds have to dump and most funds can't buy so they're essentially squeezed out. There are exception for commodities because of their nature. Add in the removal from 3 indices this Friday and the drop was actually quite predictable.
colt451 wrote: To be fair it makes less sense for the CEO to book an interview and then cancel it unless the Co. is going under then it makes perfect sense.
However, I cannot get past the fact that $283M in EBITDA was generated in Q1+ Q2 which after a 10% tax rate and $115M in interest = $140M in free cash flow.
Thompson either committed fraud or this is a massive bear raid IMO.
jsg335 wrote: I agree, but I have a terrible feeling some other bad news is coming. Initially I also felt someone was walking down the price, but this is starting to look like people in the know are bailing out. It really doesn't make sense why the CEO wouldn't want to reassure investors by doing some sort of press. It's looking really bad now.