RE:Hidden Value - do the mathHermannHaller wrote: Before anyone decides how to vote, they should do the math on these proposals. The value of these two buildings is enormous. Factoring in closing costs, and tax on the capital gain, they could still come away with over $50 million. And then what? They could buy back 10 million shares at $5! Now estimate the rent they have to pay on the buildings, take that off income (net of tax), then take your new lowered income divided by the much reduced share count...EPS goes up 44%.
Now they probably wouldn't use the entire amount to buy back shares, or maybe they pay out a special dividend, but however you slice it, there's a lot of hidden value here.
Their loan is asset back with those buildings, so they would have to redo their loan without using the buildings as backing assets. This could lead into increased fews and interests.
Also, if they can have a loan based on other assets and that the cashflows coming out from a sale and lease-back would be worse than the current cashflows, then they should just take an additional $50M loan to get the extra cash, if they needed that cash.
Basically, it always comes down to future cashflows and the best use of assets should mirror that. I think the answer from the management is pretty clear that future cashflows wouldn't be better served with the solution proposed.