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Entercom Communications Corp. Message Board

  • longtimefollower longtimefollower Jun 26, 2009 1:15 PM Flag

    A look at ETM's capital structure.

    The company bought back $21 M face of debt for $13 M in Q1. This "gussied up" income by $8 M, providing a nice offset to the cyclical weakness in ad revenue.

    By my analysis, excluding options, as of the most recent insider open market purchases, reporting insiders own 12.4 million shares, out of 36.5 million outstanding, or (little more than) exactly 1/3 of the total. That leaves a little over 24 million shares in the public float. (Remember that the Field family has control, though, through the super-voting B shares.)

    Dimensional and Goldman Sachs own 3.75 million, as reported in the proxy, leaving little more than 20 million in the "actively floating" share category. (I have not attempted to document the other institutions, that own below 5%.)

    The company bought back 662K in common shares in Q1, which equals over 3% of the non-DFA & Goldman public shares outstanding! More significantly, there remains $25.4 million on the stock buyback program, which, at the current $1.50 price would, theoretically, allow the company to buy back an incredible 16 million of the remaining 20+ million non-DFA & Goldman publicly held shares. (I'm dying to know how many shares they bought back in Q2! I'm guessing...and hoping...upwards of 1 million!!)

    Interestingly, the 10-Q states that the buyback plan expires on 6/30/09. Will the company be issuing a press release, or an 8-K, announcing a renewal?

    The upshot is that, unlike most of the other "quality" leveraged players in the radio space (SALM, RGCI, EMMS, CTDB, etc.), Entercom has the ability to CREATE TONS OF VALUE for its shareholders, by buying in debt and stock at a deep discount. This company has reduced its share base by roughly ONE THIRD, in the last several years.....and will continue to create income to offset operating pressures through discounted debt buybacks. Both activities are PHENOMENALLY ACCRETIVE! (Buying back debt at a discount adds to equity and income, and also reduces future interest payments. And we all know what buying in shares on the cheap does for EPS.)

    Meanwhile, these guys are GREAT managers, and ETM is, in my view, probably the BEST radio stock in the industry, from an operating standpoint.

    I think the Street is TOTALLY missing the story here....with the only "risk" being that the Fields try to make a lowball offer, in the way the Cox family did, for "their" radio operation, or the way Hearst-Argyle did, for their TV stock.

    Personally, if that should happen, this holder is going to GO TO APPRAISAL with his 150,000 shares. I believe, when the advertising market comes back, this is a $10-15 stock in no time, MINIMUM. (12-18 months is my guess-timate.)

    Remember: This entity was paying a $1.52 annual dividend just a year or 2 ago. That's an amount that equals the current stock price!

    Just ignore the fools that are suggesting that radio is going the way of the buggy whip. The wouldn't know value if it bit 'em on the ass.

    Where on god's green earth are the savvy institutions? How could they be MISSING this stock??!

    Really just an incredible, table-pounding, rip-roaring buy here....

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