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MFRI, Inc. Message Board

  • illinoismaker58 illinoismaker58 Apr 26, 2013 6:03 PM Flag

    Question for everybody

    What do most of you make of the sale of this division? It seems to me that management is at least trying something rather than remaining static. I hope this doesn't dilute the $10 book value and that the proceeds will be used more productively. Please share any thoughts.

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    • They may need money to meet orders, but I think this is a good sign that the orders are at least real. In the past orders have not been firm. Selling assets to build out capacity looks good to me. Also, inventory is $40 million almost as much as its market cap of $50 million. They may be able to unload around $10 million of inventory, a million of SG&A, a couple million of defined benefit pension and some of the long term debt. Those would be good things, too. So should they sell a low margin business with no bookings or issue stock? The former hands down! And they might even do a repurchase with some of the proceeds. The market didn't seem too excited about it today, but then again, sometimes there's a lag to news with these small caps.

    • This deal is a home run. They have sold a low margin business with a low basis (started in the 60's) and will take the proceeds and use for working capital for the booming saudi business. While the price was not disclosed they will have to disclose it next week. Ill bet this will boost book value significantly given the long ownership of the sub. MFRI is now much closer to being a pure play on insulated pipe and closer to being sold as I posted earlier. None of the dunces in this stock see that this is a huge positive!

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