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Otelco, Inc. Message Board

  • ushermandrew Apr 2, 2013 12:22 PM Flag

    How are people getting a $3 valuation?

    I checked the numbers out based on the the 8-K Data from 02/01, I forecasted these numbers post bankruptcy:
    Assets: 145
    Liabilities: 178
    Projected Net income: $3
    Projected Interest Expense: $10.5
    Projected FCFF: $12

    I did this really quickly so I'm not certain at all, I just don't understand how people are seeing a positive book value post bankruptcy. It should have jumped out at me. What am I missing or what did I read wrong?

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    • ushermandrew Apr 2, 2013 12:30 PM Flag

      Correction: I messed up on projected net income-- It could reach 8 million, 7.4 would belong to stock holders. So the company brings in 7.4 NI, at a 10 P/E, its a $74 market cap company... Ok I see that, but how about the balance sheet?

      • 1 Reply to ushermandrew
      • rathebefishing23 Apr 3, 2013 8:30 AM Flag

        Usherman - The balance sheet after emerging from chapter 11 will not look like it does now. This is due to "Fresh Start Accounting" - they will have to estimate the market value of assets and will replace existing (heavily depreciated) figures.

        The current figures of large negative equity is due to writing off goodwill and other assets related to TWC relationship - this was done in 2012 - all non-cash

        Check out the proforma statements at the end of the Feb 5 filing for how this might look like after chapter 11