RE:Broker thinks no buyoutThe debtholders need to stop loan-sharking the shareholders and grow a pair.
If they converted their $88 mil in debt to shares at $0.10 there would be 1.1 billion shares o/s and the $10 mil in annual ebitda would be $10 million in net income for an eps of $0.01. The stock would easily be valued at a 15 p/e or $0.15 for a 50% upside for debtholders. Removing the interest payable would free up cash for the co. to expedite its business plan and grow the ebitda to $15 million which would boost the stock price even further.
Assume transition to mobile increases yearly ebitda from $10 million to $15 million
(Note: $4 mil in reduced costs can be achieved in a merger by removing G&A duplication such as senior mgmt salaries, directors fees, IR/regulatory fees, travel, etc.)
using a multiple of 10x => $150 mil enterprise value
$150 mil + $4.5 mil cash - $88 mil debt = $66.5 mil equity value
$66.5 mil / 220 mil shares = $0.30 per SH.
Alternatively…..
Get rid of debt $88 mil / 0.10 = 880 mil shs + 220 mil = 1100 mil shs.
Ebitda of $15 mil becomes net income (~ $50 mil in tax loss carryforwards)
15 p/e => $225 mil value or $0.20 per sh
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180 mil shs o/s
40 mil wrts/options in money ($2.5 mil cash from proceeds)
220 mil total
$2 mil cash
$2.5 mil exercised wrts/ops
$4.5 total cash
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willis888 wrote: Speaking with my broker today,he thinks I am offside on my theory a buyout is coming.He says if they were in talks of an imminent takeover they wouldn't extend the maturity date or extend the warrants.He said the key item was the covenants being reworked.He aslo said to pay attention to the fact the warrants were extended.Whatever they are working on,TEC must think there is still money to be made on the warrants.Anyone else on theories of what is going on?At 0.035 and debt load,what is the way out?Rollback shares and then raise money?