RE:CWC And HWOFirst off, CWC management are top notch operators and their net debt is around 23 mil vs. a mkt cap of 80M, which is a solid debt to equity ratio that most of ther peers would kill for. They clearly are not distressed despite the low stock price...majority of investors just dont get this point. Deals get done based off 2 metrics...EV/EBITDA and/or relative to tangible book value. The going rate for energy services co's, with this debt profile is around 1.2-1.3 time book value or 8-10 = EV/EBITDA. In order for a deal to happen, one of their investment bankers must write what is called a "fairness opinion letter" which states that investors are getting a fair shake. 0% chance that you could justify selling the company for less than 1.2x book...zero. This fact was confirmed when I sent the financials to a friend who was an analyst for 15 years and now serves as an investment banker.. the guy thinks the multiple should be closer to 1.5x book.
Look at LII.V last year, Logan Intl...from memory, their low was around .55 and were aquired last august for 1.50. Mispricings happen all the time in Canada. Look at Trican printing @ .35 intra-day before Wilks Bros announced a stake. The solid fundies of CWC are undeniable. Brookfield has a decision to make, either sell off the 3 divs to a combo of various firms or take it private for about .46/.50 which would only cost another 35-40M. If no one wants the whole company, then Brookfield could take it down and sell off piecemeal down the road or re-ipo post 2018/2019
Risus76 wrote: LuckyLuch, I understand that you are a significant shareholder in CWC. Book value currently sits at .40$ and its currently trading at half that. What would be an acceptable offer to be acquired at this point? I don’t think anyone will offer book value and the chances of Brookfield taking them private is slim because I don’t see CWC surviving on their own (correct me if I’m wrong).
Buyout from another company i.e HWO is necessary and would be a win:win for both CWC and HWO. At this point, wouldn’t .25-.30$/share and better chance of future growth be better than nothing? Assuming of course that HWO and Cyrus is smart enough to be interested and will press on with serious negotiations, what is your sense about what CWC shareholders want?