RE:RE:RE:Anyone explain how spending $30mmU$ on Buyback is 6.6% YieldHey WS, Good to see you here. What is your take on why de Alba is doing this? At yesterday's close the market cap of FEC was about $679MM.C, at $12C a share the market cap would be about $1.1Bil.C.
I personally think that both CC/Gram, tender their max number of shares. Thus, de Alba/CC would get 41% of the $30mm.U$. Maybe they need cash? But even more importantly, I think if they back out and the company soon sells itself in whole or in parts for far more than $1.1Bil.. The deal look super shady and I think it would cause the regulators to step in. In the end, if they do tender their max shares and the offer is overscribed they will still own 55% of the shares.
Besides CC/Gram being able to bail out of the deal for any reason at any time, they also reserved the right to change the deal. Meaning, they could change the terms to buyback more than $30mm of shares, which often happens in PP's.
If CC/Gram tender their max shares, the $12/share Buyback will almost centainly be overscribed and as you noted it is a pro-rata buy back and most of us own less than 1/10 of 1% of the shares, most far less, so we will only be able to tender a small number of our shares. But if the Vultures bail out of the buyback, there is a good chance one could tender far more of their shares. It is a very strange and Tricky deal indeed.