RE:Moving to the next stageAt some point, the BoD had to assess if the price was going to get better and how long it might take for a better price to mature; to a great extent that has been recognized in the $48M now and $35M-$40M additional in possible earn-outs. That needed to be balanced against the opportunity cost on acquisitions delayed, resolution of the debt covenants and the attractiveness of a pure-play ITS company. Likely being offside on the debt covenants impacted the price, but by how much.
I think it will be very interesting to see how the market reacts tomorrow. My take: cash now is worth ~+$0.40/share. Earn-outs ~+$0.35/share (but no detail on milestones or timing, so likely to be given little value tomorrow). Kicking the covenant breach down the road until year end could be interesting. QTRH essentially has until year end to show that the margin issue at ETC is corrected. So far, QTRH has brought forward nothing to demonstrate that the margin issue is improving - so I'm sceptical that the market will give much value to removing the debt covenant overhang in the near term. Anything over +$0.40 tomorrow will be an upside surprise to me.
The press release did say the transaction "delivers significant growth capital to Quarterhill's balance sheet" so there may be news in the future on M&A.