Paraphrased: "The announcement isn't clear whether the shares will floated as a secondary or handed over as part of the deal."
1. I think its wrapped into the deal with yesterday's close being the PPS - around R$2.13. This SHOULD help put a floor under the PPS.
2. The balance of cash and shares paid is pretty good, but I am not happy at all about the assessed value of Alphaville. The last 20% cost as much as what they paid for the first 60% in absolute costs. The company simply responded to my email that the value was "independently" assessed.
3. My greatest fear was that they would pay for it all with a secondary, diluting 40-60%.
4. Final negotiated amount paid was R$359 million vs. R$369 million cap.
5. R$359m - $149m = R$210m. So remaining cash pile is approximately R$700m. Expected cash flow of $500-700m for 2012. A similar amount of assets that can be secured for additional debt. R$1.4 billion in short term debt coming due through Mar 2013. This is slicing the bolanie thin, but I don't anticipate another secondary will be necessary. A positive surprise in 3Q or 4Q earnings could give the company a huge boost.
Will three of you please 5 star the initial post on this thread. (I want this info to be easy to find when the pumpers start to flood the board.)
1. 432 million shares outstanding. (They will now have 502 million - 16% dilution overall.)
2. R$947 million cash. This will now drop to R$738.
(359-150 = $209 still owed)
3. 3Q report redux. The finished inventory is another potential cash flow benefit if they can sell quickly at a good price:
"Liquidity As of March 31, 2012, Gafisa had a cash position of R$947 million. On the same date, Gafisa’s debt and obligations to investors totaled R$4.3 billion, resulting in net debt and obligations of R$3.3 billion. The net debt and investor obligations to equity and minorities ratio was 122% compared to 118% in 4Q11, due to R$76 million cash burn in the first quarter. Our operational consolidated cash flow was neutral in the 1Q12 and in March, Tenda achieved positive operating cash flow. Excluding project finance, this net debt/equity ratio reached 48.3%. Gafisa’s cash position and liquidity are sufficient to execute our development plans. Gafisa’s current debt maturity structure includes 32% of the total debt due within one year. We expect positive operating cash flow of between R$500 – R$700 million in 2012. Gafisa has additional receivables (from units already delivered) of more than R$500 million available for securitization and R$370 million of finished units in inventory. We also highlight our current debt covenants ratios, as shown below in the table 45. Currently we have access to a total of R$1.6 billion in construction finance lines contracted with banks and R$0.9 billion in lines in the process of approval. Also, Gafisa has R$2.4 billion"
Here is the release in English. Note that the details of the secondary are not divulged. Most likely the PPS offered will be something between R$2 (worst case) and R$2.50-3.
Also, I am not sure if the unsold finished inventory mentioned in the Q report is factored into their annual cash flow estimates. That would be a good question for IR.
"1. In addition to the Material Fact released on June 1st, 2012 regarding the Third Phase of the Investment Agreement and Other Covenants entered into on 10.02.2006 (“Investment Agreement”), which established rules and conditions for Gafisa acquiring and holding shares of the corporate capital of Alphaville Urbanismo S.A. (“AUSA”), the Company informs that having the final amount of the operation established as R$358,985,424.41, the Company has notified Alphapar – Alphaville Participações S.A. on the present date that the implementation of said Phase will be through the issuance of 70,251,551 common shares, issued by Gafisa, as set forth in the Investment Agreement."