Its been a buyout candidate all year. But yes, as time goes on it seems more and more possible. I just listened to the CC. Sounded solid to meet. Management seems very focused and running on all cylinders. I still see this easily in the 40's......JMHO D
Yes WNR has been a candidate ever since they made the geat sale of Yorktown and became a focused play. However they may be becoming a target instead of just a candidate for obvious financial reasons. I am estimating about $750MM in cash flow in 2013 but the 1Q looks like it is running ahead of my estimates. We know cap ex is $206 and they have reduced their debt by over $300MM in each of the past 2 years. If they just pay it all off in 2013 they will still have money left over for special dividends. But the real story is that at $45 per share, a private equity group or strategic buyer could take over this company for less than $5B so if a 90% debt financing was used, the cash flow would pay off all the debt in less than 7 years generating a huge IRR for the investors. Did you notice that Franklin Mountain suddenly stopped selling shares last June after selling 1MM shares in the first half at prices that look silly today. Mgmt could join forces with a strategic buyer and only have to purchase the 65MM shares owned by the public, so this deal beccomes incredibly easy to finance in the current interest rate environment.
I have no idea what will happen here, but if the debt goes away in 2013, think about $500MM in dividends and stock buybacks each year starting in 2014. The NPV makes this an easy double, so who cares which way they go?