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Extendicare Inc. Message Board

  • johndaley404 johndaley404 Feb 27, 2014 1:13 PM Flag

    Sale or Lease of US business

    The company announced that they are negotiating with 1 buyer for the US business sale / leaseback. This is a very big deal which the market doesn't seem to understand. The US business maybe has $100-$150 million of implied equity in it right now judged by the EXETF share price. That means that the business is trading at 6-6.5x EBITDA, laughably low vs. their peers. It also means that whoever acquires this business will have $500 million of 30-year 4.5% debt on the business, the capacity to issue another $250 - $300 million on it and will be getting $30-$50 million of free cash flow per year on their equity investment (assuming that they are as good or, hopefully better, operators). This stock will hit $10 before the end of the year, and the only downside is that you get a 7% dividend yield for waiting.

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    • I'm guessing that the sale is taking a lot longer than you expected... Of course the point when all small investors feel max pain and being to sell is the point when the US business will be sold, DOH!!! I'm holding but feel their pain of boredom while waiting. Tic toc tick toc tick...

    • Where did you get your information from? It seems to me that many were expecting that last year and all ended the year with a disappointment. I'd like to see a sale, lease or spin-off but at this point have lost faith that management can get it done. I thought that I read or heard somewhere that their goal was to complete a deal by the end of 2013. Do you recall a statement to that affect or was it just wishful thinking by a few fools?

      • 1 Reply to rumorwhisperorbuzz
      • Here's what I got from the latest Q: "With the assistance of CitiGroup Global Markets Inc., as a financial advisor, the Company has studied various alternatives extensively and analyzed relevant considerations, including valuation, taxation, curtailment of future liability costs, and strategic implications of each option." Last year, they expected to close by end of December. Right now, they're negotiating with one buyer, which could mean that they're close to a deal. I wish there were options so I can get an idea of the timing (helped me get a timely position in MSPD). Regardless, I'll buy shares close to Q1 (May 7).

    • Earnings miss again?

6.70-0.05(-0.78%)Aug 24 3:34 PMEDT