The company can't supply details because they don't know what they are. Let's say they win a bid for $500 of Freedom Group assets. The debt markets will tell them how much new equity is required to support their existing cash and the new debt. The banks may supply $250mm of senior debt, if the company raises $150mm of subordinated debt and $100mm of new equity. Until they have the structure of a deal, they can't tell us what it will look like.
That $100mm would itself dillute shareholder equity 13% (my estimation) thus the share price would be $8.00 (again, just my estimation) as that would be price Secondary would go out at.
Gotta remember $500 million is doubling the Cap of the current Company.
158 years old, with a World reknown name and it's a small cap stock still. this does not instill confidence they can handle the big times.
Can they make awesome rifles and pistols...a Resounding yes!!
Do they have a proven track record with buying out companies?...A resounding no!
Stock price won't ever be reflected until they can show Q and yrly. results that they can manage a bigger company that will be twice its current size. And that's only buying part of freedom, not the whole thing.
That's unreasonable zippy do da new I.D. and all. You think Freedom is only worth assumption of existing debt? You are a kook!
You see, a hedge fund actually went out and made a complete, massive gun manufacturer that dwarfs 158 yr. old SWHC and even made them very profitable to boot, unlike SWHC (until last Q).
Get your facts straight. Freedom isn't giving their stuff away, and hey, who knows, maybe RGR will buy it up and leave Smith with Nada. They can then get into puppy protection fences. Hear Smith likes to buy dogs anyways. lol.
You may be right datbe,. A possible scenario based upon the size of the shelf is that SWHC buys Freedom assets for $500mm that have ebitda of $75mm (a 6.6x ebitda multiple). Combined ebitda is $200mm which supports $600mm of debt, which is more than they need. A $300 senior credit facility and a $200MM issue of long term notes gets it done with no dilution. And that is a conservative capital structure that assumes no synergies.