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ZST Digital Networks, Inc. Message Board

  • baiwanfuweng88 baiwanfuweng88 Sep 23, 2011 5:01 PM Flag

    if I were the CEO of ZSTN

    If I were Chairman Zhong Bo, and if I knew that ZSTN's financial statements were accurate, I would take ZSTN private in a heartbeat. Do the math. There are 11.7 million shares outstanding. Zhong Bo owns just under 5.1 million shares. That leaves 6.6 million shares that he doesn't own. At today's closing price of $1.81, the shares he doesn't own are worth $12 million. At 6/30/11, the company had $50 million in cash, no debt, and positive cash flow adding to the cash pile at a rate of about $2 million per month.

    The CEO could make a generous cash tender offer of, say, $3.00 per public share. At such a large premium to market, he could probably get all the shares. (Anyone reluctant to sell, facing the prospect of becoming a tiny minority shareholder in a private company, would likely give in and sell.)

    That would require $20 million cash. He should be able to borrow $20 million from a bank, or an investment bank, or a hedge fund or institutional investor. Heck, even if he had to get the money from a loan shark, it wouldn't matter. As soon as he owns 100% of the company, the company declares a $20 million dividend, and he uses that cash to pay off the loan.

    Now he owns 100% of a company that has $30 million in cash, (call it $25 million after paying fees to the lender and taxes) and still no debt. And now the cash flow is even more than it was before, because all the expense of being a public company is gone.

    Like I said, I would do it in a heartbeat if I was Zhong Bo and if I knew that the financials were true.

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