Just Energy Group Inc. (Canada) T.JE

RE:RE:RE:RE:RE:RE:RE:Read the info circular

[EarningsPower]

This of course assumes you paid par for the debt. 

Buying convertibles at $0.20 on the dollar was the opportunity, not buying debentures back at par.

Add in the rights, to buy 65 shares at 3.41, and people that bought debt at $0.20 and excersice their rights equals have a much lower cost. [$220 + $221] / [35 shs + 65 shs] = breakeven of $4.41 / share in the new recap'ed JE.

Management guided to $130mln - 160 in EBITDA. With the new debt of ~$450mln, and 5x EBITDA multiple (historically the company trades at 6-8x, the large competitors at 10x+), you have an equity value of  $4 per share (all rough). Plug in any range you see justifiable. With 6x at midpoint, the value jumps to $8. The debt adds a lot of power to the upside.

So if management hits low end guidance, and the company trades worse than what it did while going through a rough special review process and when they had $1bln in debt, I get pretty close to cost. A great opportunity. With millions of debentures trading after the announcement, I feel like other people realized this too.

It's very interesting non the less... will be neat to see how it closes. Good discussion!