RE:IPO could be a winnerJust realized earnings date is posted as 8/5, a week from Thursday. I think that's sooner than usual, will be good to get a print Pioneer closed.
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This is all with the assumption that this IPO places successfully and trades over $10/share:
As it relates to TWM:
After the $180M payment from Renewables, their debt at about $550M would just a bit more than their shares of Renewables ($12 * 34M shares or however that $405M breaks down).
Interest savings from the $180M would be about $10M/yr which would be retained cash on top of the interest savings from Pioneer closing
As it relates to LCFS:
They'll have $70M of availability on their credit line ($55M to TWM, $25M to reimburse diesel costs to date) probably generate ~$30M in DCF a year.
Should get 45k credits in 2021 ($18M) plus another 89K ($35M) before construction completion. That gives them a total of $153M in liquidity, so it'll be tight to fund construction without issuing additional equity. I haven't mapped it out exactly, but it's not like it's a $500M IPO to build a project that costs $200M: they'll be in debt from day 1.
LCFS at project completion would be at about $150M ebitda/yr, at a 6x EV/ebitda multiple that makes them a $1B company equal to TWM now. That's the uplift they're looking for I guess, and why selling 50% of the project for $100M now wasn't as attractive as raising money by rebranding their truck racks.
Some napkin math says, if they retain $100M of the $150M EBITDA as DCF, and end up with say, 45M shares by project completion (raising another $120M through a secondary offering in 2022), that's $2.30/share in DCF. If they pay half of that as a dividend that's nearly 10% yield on a $12 IPO.
Of course, as TWM taught me: there will be constant churn of assets and growth capex to fund, additional secondaries and offerings of debt.
Because LCFS will own components of several TWM assets I think this makes the sale of TWM near impossible, and if the offering prices at anything close to their target buying both just got a lot more expensive. Hope for some projects back in the original TWM's wheelhouse after close of the IPO.