Lets try to project the revenue and profit to measure the possible worth of the company.
Net sales for the past 5 years were $582, $601, $615, $638 and finally 2009 $500 million (fell of the cliff). With three consecutive Q's increasing in sales and things picking up (at almost full capacity), it is reasonable to project sales at around $550 mil. for 2010.
Total operating cost for 2009 was $450 (not counting goodwill writeoff which is a one time occurance). Operating expences will go up by around $30 million because of higher demand/sales, even though they said that they would trim their workforce a little more. So Operating expences for 2010 will be around $480 million.
Their interest expense for 2009 was $67 million and they lost another million for the year on currency exchange. Through this restructuring plan, their debt will drop to $470 million ($60 of which is a new loan and will add $60 mil to their cash) and the interest rate is 5.75%. So the interest and principle payment will be around $40 million a year. Partly offset by the interest they will be collecting on their cash on hand, which will be a little over $100 million. So we can deduct $2-4 million from that total if we wanted to, but lets keep it at $40 to be conservative.
Taxes should be minimum, since they have enough writeoffs and losses to carry forward for a few years ahead.
Ok, back to projection for 2010. So revenue projection is around $550 million. Operating costs around $480 and interest around $40. Which leaves a profit of around $30 million divided by 20 million shares. So this years profit should be around $1.50 a share (or $1.60+ if warrants are not exercised), which is based on a rebound year with still weak earnings compaired to 2005-2008 earnings. So what is a fair share price of a stock which generates a $1.50 profit? $15? I'm not sure. Their balance sheets are going to look really healthy and they have to use the access cash to either buy back their shares, pay down their debt and maybe reinstate a small divi. We shall see soon enough.
"Through this restructuring plan, their debt will drop to $470 million ($60 of which is a new loan and will add $60 mil to their cash) and the interest rate is 5.75%."
5.75% is the margin over the base index. The index varies by region.
Part of the lines and loans are just for the term of the Chapter 11 if filed. My brain is tired from reading and reading the filing, so if there is an equivalent for post Ch-11 I just haven't gotten it parsed out yet.
BAsed on those figures and the reduced debt, Max payment in interest for 2010 should be around $40 mil.
Also be having a bad year in 2009, the company set itself up for a monster rebound. Next Q earnings will be compaired year over year to Q1 of 2009. So they will have the sequential Q growth and a monster y-over-y growth. If they ink out revenue of $136 mil as trend predicts, thats an increase of $20 mil from Q1 2009 or 17% rise in revenue. Profits were (.19) in the 1st Q, when they show a positive number, percentage will be huge. It's going to look really good in a news release and garner a lot of attention from Institutional investors. Add the fact that many Institutional investors have a $5 threshhold for stocks they can invest in. The shares that will trade on the open market will be in high demand.
This deal is also unique in another perspective. I follow and trade other stocks which had debt for equity exchanges. All of the exchanges were made at deep discounts to the current trading price those stocks were trading at. For example, C exchanged debt for equity at $3.25 and lower, raising their share count from 5 billion in 2008 to almost 30 billion right now. So shareholders from 2008 were diluted by 80%+ and share price is at $4.31 right now (high of over $5). BAC doubled their share count (exchange at $12.50 a share) diluting existing shareholders by over 50%. On the smaller company side I follow FBC, which jst went through a second dilution at .50 and lower and diluted their 2008 shareholders by over 95%. YRCW went through an exchange two months ago and diluted shareholders by 95% through a debt for equity swap. The debt holders exchange rate was .23 a share, while YRCW was trading close to a $1 and now trading at .50+. So the fact that the XRM debt holders are willing to exchange at a higher price then currently trading (over $1) is very strange and a very positive sign.