Let's talk free cash flow here for 2014, to get a proper stock price.
UNTK did around $45 million in EBITDA in 2013. They paid a whopping $30 million in interest, spent $2.4 million on cap-x, and $8 million capital leases. In 2014, leases should go down by about $5 million (they are moving towards operating leases), and interest will go up by a similar amount, so it's a wash. Basically, UNTK is doing around $0.20 per share in free cash flow, even with obscenely high interest rates that most people don't even pay on their credit cards.
With a refinance, they can probably knock off $10 million in interest expenses annually, which would bring free cash flow to around $14 million a year. Let's be conservative and call it $10 million a year in free cash flow with a refi. That's around $0.50 per share. Which leads to my price target of $5 within the next 12 months.
I more or less agree. Two points: (1) the REFI may come at the expense of paper, in which case your PSP will shift somewhat in the short-term, and (2) I am hoping for a wholesale REFI, which really will free up this awesome cash-flow machine to do do its things
The $5 is, in my view, just bringing us back to the pre-scandal valuation, and does not allow for the fact that the company is now much stronger, leaner, and safe. Even If I take a very negative REFI look, I expect that the company will be worth far more than $5 in the not distant future. And then, of course, there is the declaw, which in a best case scenario will amount to almost 2/3 of the yearly interest burden plus the enormous NOL, which is just lying there, waiting to be discovered.
We will see soon enough. For now, we have to lean back and watch this day of volatility unfold.
I'm not sure what you mean by "expense of paper", but they don't have to issue shares to refinance. In fact, very, very few companies issue share on a refinance, and only those in extremely dire circumstances issue shares (like UNTK last year). But, UNTK is in a different position now, and it's doubtful they will need to issue any shares to refinance, especially considering how attractive the EBITDA is to lenders..