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AMCOL International Corporation Message Board

  • bfg007_99 bfg007_99 Aug 4, 1999 5:42 PM Flag

    Don't trade alone

    "The stock surfer at "webmag.com"

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    • on that web address and search of that site also finds nothing. Can you give us a synopsis
      please.

    • is on file with the SEC today. While this deal
      may break apart (the current price is at the high end
      of the range prior to the sale) there is no lock up
      of any current shareholders and management may
      consider other offers if they materialize.

    • There is also the risk in this stock that the deal could fall through for various reasons and return to lower levels.

    • We have some agreement that value after the sale
      should approach $4 to $8. But I do not agree that we
      will see $7.50 shortly after the liquidating dividind
      is paid, unless Nanocor sales of significance become
      much more apparent. They need to DEMONSTRATE that the
      minerals businesses can be grown aggressively to get to a
      15% P/E and this takes time. Also, corporate costs
      must be shown to be scaled to the new size. This too
      may take time.
      I see a strong challenge to the
      lower end of the range as some sell their mineral
      business shares. We are now looking at $1 to $2 being
      added to the liq. div. and we may see that for some
      time until either the company demonstrates their view
      of undervalue by opportunistically buying the stock
      back and demonstrating a "floor" or a higher value
      becomes readily apparent from repeatedly posting
      improving better numbers.
      My last thought - it is
      possible to still see a higher bid for the whole company
      over the next month.

    • I have been buying, though I certainly have my
      concerns about the structure of this deal, but it
      definitely makes sense to keep the shares in a tax-free
      account. The subdued buying of the stock after the
      announcement might be due to the fact that current buyers are
      walking into a short term capital gain.

      I
      calculate the expected return as follows:

      The gross
      sales price of Chemdal is $24.30 per share, less $7.40
      in taxes leaves $16.90. $1.85 or so per share will
      be used to reduce debt. Transaction and other costs
      will bring the windfall down to $14.50 per share
      distributed to shareholders.

      The remaining company
      should have $300 million in revenues and profit of about
      $.50 per share, calculated as follows: $1.25 per share
      expected 2000 earnings pre deal, AMCOL keeping about 40%.
      Note that debt service will be reduced by about half,
      or about $.15 per share per year. This improvement
      might be offset somewhat by some fixed costs being
      supported by a much smaller company.

      A steadily
      profitable company with low debt and growth of about 10% (a
      recovery in Asia could further improve growth) should
      easily sell for a PE of about 15. Indicated post deal
      price: .50 * 15 = $7.50

      $14.50 + $7.50 = $22.00,
      which should be realized in three months, or 42% more
      than AMCOL's current price of $15.50. 42% annualized
      is 186% per year. Rarely are such returns apparent
      with so little risk.

    • I haven't done the math, yet. Next week I'll
      tackle the 10-K's, AR's, & such to see what I come up
      with.

      My first impression that ACO will be worth holding
      is based primarily on the fact that they're only
      selling 40% of they're sales, they're debt-free after the
      sale which will eliminate one drag on earnings. Also
      of note is the company is publicly stating it
      expects eps growth of 15% or more from the
      nanocomposites. While they could be wrong or even falsifying
      reports, there's no factual evidence of either & making
      groundless claims violates SEC rules. They could get their
      pants sued off. Insiders own 27% of the stock per the
      press reports.

    • But also less debt. Has anyone done a calculation
      as to what the value of this company is after the
      sale? My crude estimates put us at 4 to 5 per share,
      assuming the nanocomposite potential does not come
      through. And if it does? Over 10/share.

      By these
      estimates we are undervalued by a buck or two, which I
      write off to the time
      premium.

      Comments?

      SRD

    • Does anyone have an idea when this segment will begin generating significant revenues or is it just a pipe dream. Being smaller, AMCOL may have less money to develop this market.

    • Thanks 'OneOfTheGoodOnes' for that reply.


      Do you know what will be left after the sale? will
      the remaining company still be profitable and what is
      your view on what the share price will be after the
      sale?

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