Good question – I actually wanted to tackle this. The new EV isn’t so simple to calculate as there are a lot of moving parts which are subject to interpretation.
Lets start with debt: The PR from 2/5/10 (this takes into account the D/E swap) shows $1,133 mm outstanding as of YE 2009, but this figure does not include $548 mm of LOC’s currently outstanding without which YRCW cannot survive. So including these, the debt is $1,684 mm. The line item “Pension contribution deferral obligation” increases by $40 mm a month so add another $120 mm to get $1,804 mm proforma for the end of Q1 2010 – In this instance we are giving YRCW the benefit of the doubt that they will not have drawn any $$$ under the unused portion on the revolver or Receivables facility to fund the daily cash burn. If you want to be more conservative add another $80 mm to get $1,884 mm.
Now the Equity: The 2/23 PR shows 1,054 mm on a fully converted basis, the new $70 mm convertible bond represents another 163 mm shares. Last, is the Unions 20% which is 264 mm, just announced, for a total of 1,480 mm. This figure does not include the 5% management options which are expected soon, which should take this to 1.6 bn shares. Using a price of $0.50 a share is a $740 mm market cap, excluding Managements 5%, or about $800 mm including.
Cash on the balance sheet was $98 mm at the end of Q4, 2009. The year end PR also indicated that YRCW would receive an $85 mm tax refund. So if to assume they don’t draw on the revolver, increasing debt, figure they burn the $85 mm refund instead.
To keep it fairly simple - that leaves us with pro-forma Q1 debt of $1,256 mm or $1804 including LOC’s (both figures exclude additional Borrowings under the Revolver. Market Cap of $740 mm or $800 mm (your choice) and cash of $98 mm.
Using the $740 mm market cap gives an EV of nearly $ 1.9 bn to $2.45 bn (including LOC’s), and using an $800 mm market cap gives an EV of nearly $ 1.96 bn to $2.5 bn (including LOC’s).
So even if we are generous and assume they can make $400M EBITDA per year starting in the second half of 2010, and a 5x EBITDA multiple, valuation of $2B versus likely enterprise values isn't very compelling.
Are you sure that some substantial port of the debt you are enumerating doesn't go away and become equity?
"The line item “Pension contribution deferral obligation” increases by $40 mm a month so add another $120 mm to get $1,804 mm"
The deferal and suspension are two seprate things. Are you suggesting the $40MM per month is related to the initial deferal? YRCW is $40MM - Their Number - per month by not having to pay into the Teamsters pensions. This concession was voted on by rank and file and does not have to be paid back nor is accruing.