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Emmis Communications Corp. Message Board

  • longtimefollower longtimefollower Mar 30, 2011 2:44 PM Flag

    Price prospects.

    Max short to intermediate term downside 20%. (Seems like there would be an absolute floor at 80-85 cents.) Max short to intermediate term upside...100-140%. (Wouldn't be out of the question it could trade up to as high as $2.00-2.40 again, before the end of the year, imho.)

    Love the risk/reward here...especially since the 8-K filing today represents a DRAMATIC reduction in risk...that the Street has priced in NO additional benefit for. (That's CRAZY.)

    I thought the stock would have opened up at $1.20, and would be trading at $1.20-1.35 for much of the day. Oh well. Don't look a gift horse in the mouth.

    Anyone who calculates any kind of EV numbers for this business a year ago, when the CEO offered to buy it out at $2.40, and an EV value now...even if that value "only" went up 10%, accrues a hell of a lot of additional value to the common stock holders.

    One only need look at what happened to Citadel, when it went bankrupt...and now, by my caculations, is being bought out for a price that would have accorded some positive value for the old common holders (i thought it was about $1 per "old" share, but I haven't done a rigorous calculation).

    I'm tired of the Street's being so stupid in evaluating the value of this company...but I guess I should be happy about it. (Or maybe, because of the huge disconnect, self-doubting??)

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    • ltf - I posted this on another thread.

      How is this refinancing good news?
      A MINIMUM 12.25% interest rate? Plus 6% exit fees!! This is nothing short of usury.

      I own EMMS stock but I think that this refinancing means that most (if not all) increase in ad revenues will simply flow to Canyon Capital. If the radio ad market turns south two quarters down the road, EMMS may even have difficulty in servicing this debt.

      Granted - they bought themselves some time. But, you have to ask yourself, at what price?

      I am interested to hear your "balanced" take on the whole thing. You have not touched on the negatives.

      • 1 Reply to cemadh_99
      • Obviously, the market is looking at the cost of the debt as a negative....but I doubt management would have done it this way (rather than selling stations immediately), if they didn't think it would be better for shareholders over the long run. Or maybe even intermediate run.

        The value of the common holders' interest will go up, with the radio market...irregardless of the higher cost debt. And the radio market ad revenues will be up for each of the next 2 years, imho...both volume, AND rates.

        But maybe I'll be wrong, in the short term, and enough people will want to get out, on the higher cost of debt, that they'll take it down to 80 cents.

        Personally, I would imagine that the 6% exit fee represents a "claim" that Canyon gets, for all of its trouble, if EMMS sells a handful of stations, within 6 months, and is able to pay off most or all of the debt. Or if the CEO finds someone else to finance him in taking another run at the company...and want to pay off all the Canyon debt in short order. In that sense, the 6% exit fee can almost be seen as bullish...as it may be suggestive of a shareholder wealth generating "triggering event."

        Or, i could be delusional, of course.

 
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0.75+0.02(+3.09%)Jul 1 3:59 PMEDT