I don't expect the new common to pay a dividend. I STILL come up with $3.80-$4.00 in valuation for the new Class A. That is assuming a 50% haircut on the renegotiated note; a goodwill writedown; a discount for no forward dividend income but a premium for the reduced debt; the addition of deferred interest in the new common and expanding wireless services. In other words, this is a toss-up. And what do I know? This one has some of the finest minds in hedge funds and on Wall Street scratching their heads. I DO know that I want to be a shareholder of record on Feb. 8th so I can vote during the ensuing 35 day period before the prepackaged bankruptcy is filed. I welcome any insights since I have a lot and so does my Mother, whose account I am managing. Thank you in advance for anything you can dig up.
FWIW, here is what I think. I like your valuation. Short term, its anybody's guess where OTT will go. I suspect there are still quite a few long-suffering longs who bought OTT at MUCH higher prices for the unsustainable dividend & interest payments who are still waiting to lock in their loss.That may exert some downward pressure in the short term.
In the long term, despite some opinions to the contrary here, OTT is in much better shape than it was before Friday morning. Risk has been lowered considerably. Had OTT not killed its IDS structure, the alternative would have been much worse. This new capital structure allows it a much better chance to grow even with industry headwinds that remain.
Here's something else to consider when referring to those brilliant minds at hedge funds. The latest data suggest OTT was only 10% owned by institutions. 10%. As low as its ever been. They bought at much higher prices and sold at the bottom. OTT's average volume lately has been south of 100,000 units. Friday almost 2.9M traded hands. That was not widows & orphans looking for an interest payment. That was some of the same hedge funds buying back in that got burned by OTT last year.
You said "...expanding wireless services." They canot expand a business they are not in. I wish they were. Here from the company itself: ABOUT OTELCO
Otelco Inc. provides wireline telecommunications services in Alabama, Maine, Massachusetts, Missouri, New Hampshire, Vermont and West Virginia. The Company’s services include local and long distance telephone, network access, transport, digital high-speed data lines and dial-up internet access, cable television and other telephone related services.