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AMR Corporation Message Board

  • bronze_age_babe_1 bronze_age_babe_1 Apr 4, 2013 11:16 AM Flag

    Do I have this right ? The merger is basically a done deal. And, the JP Morgan analyst sez that AAMRQ


    is worth $6.50 per share if LCC shares trade at $16.00 at time of merger?

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    • Barrons article says US Air has to be 18.5 in order to get 6.71, if you can believe the JPM analyst, which I dont.

    • Slow down for a second... First of all, and you can ask any wall street veteran, the price of AAMRQ has absolutely nothing and I underline the word nothing to do with the price of LCC's stock.... Here is what we know so far: The court has approved the merger and the details are simple - e.g. LCC gets 28% of the new American Airways stock, AAMRQ gets 3.5%, and the remaining creditors/bondholders get the remainder. Now, "THE VALUE" of the new company will not be "actually" known until that moment in time that the new companys stock starts trading on Wall Street. Now I have heard all kinds of values thrown around and the most pervasive one seems to be an 11 billion dollar value. AMR has about 365 million shares outstanding when you take into account what has already been issued and the pending warrants and options that will eventually come into play as well. So, if you take 11 billion and divide this by 365 million, you get $1.05 per share. Therefore, if the new company goes public at 11 billion, the most you get will be $1.05 per share. To get to JP Morgans $6.50 per share, the new company would have to go public at approx 6 times what the stock is worth or 6 times the 11 billion or 66 billion dollars... THATS ABSURD. What is really driving this higher stock price for AAMRQ is the thinking that when the bondholders and creditors are made whole, there will be more money left over for the AMR shareholders which would increase their 3.5% to who knows how much. I personally think that thought is also absolutely absurd as those money guys are going to want it all. Just remember, the merger documents talk about 3.5%, not 3.5% + + + +... Remember, the value of that 3.5% will not be known until the minute the new American goes public. I hope for all that when that happens, and the music stops that everyone can find a chair. That will probably end up being wishful thinking. As it sits right now, AAMRQ is not worth anymore than a dollar a share and it has no tie to LCC price..

    • you got it wrong, if lcc trades at 16$ you will get about 1 smth for each share of aamrq, this jp morgan report was available on internet for free, i tried to find it again, just to give you the link, but couldnt find it, their analyst thinks that aamrq should be 6.5 because if llc trades about 16 you could make a lot on aamrq, by the way in the report there is information on previous jpmorgan recommendations on american airlines, and the targets, they always got it wrong, and stock has never traded at their target prices going anytime back

    • That is my understanding.

      Sentiment: Hold