You have to show patience. this is a work in progress and would remain so for a while.
You could buy some of the bonds of theirs that are trading at 50c of pari, if you want to
reduce your risk. my guess is that over time this company could have enterprise value of
$400M and market value of close to $200M, but that will take a long time. how long -
Invest what you can afford to lose without worrying too much and get back to it in two years.
Absent of any more financial crisis, they should be able to sell assets, pay back much of
I do not understand why Elbit is even mentioned at the same sentence as Plaza. Plaza is a
free option for Elbit's shareholders. thats it. these are two companies that are in different
situations. Elbit is in a much better position.
Lets hope Novartis exercise their option on Gamida and that Insightec's sales are finally
ignited by the expanding insurance coverage and the fact that GE medical is promoting
them through their sales force.
The company is not allowed to sell assets and redeploy the money, while refinancing forever.
That might be tough for the manager, but being that we are in a zero interest bubble area, being a net seller
should be regarded as a good thing for the stakeholders (shareholders and bond holders).
I think Elbit could get more out of the two parcels in India. the prr in Bangalore is nearing (finally) a full
land acquisition / compensation for the land owners and having construction start early next year (
financing is ready) should allow a lot more value to the land than 6 crore per acre.
Chennai land is now a bit more of an enigma as far as timing.
The two parcels cost was $134M and the value has not decreased by now. maybe they could try to generate
interest by large pension funds (Ontario for example) or other large investors.
A lot of these investors are looking to diversify outside of energy and these assets could make sense for
them (cheaper than market and close to operations or operating already).
Good luck to the company.
Bluestem, this is not a real operational company. it is a collection of assets with a bunch of
mortgage liabilities against specific assets (ie the hotels with their mortgages and the bank loan)
and bonds on top of that. a structure like that will always have a going concern unless it has an
enormous amount of net equity.
When the company liquidates assets, the accumulated assets will become a huge asset (no
tax obligation on return of capital).
Anyway, I am a bit more optimistic than you are.
This company is majority owned by a single family, so little chance of them being bought out (unless a
very large premium is involved).
Have a bit of patience.
So you did not know the company was risky? Going Concern is something that would have to be attached
to the reports of a company as risky as here. Needless to say , you are choosing to not think or write
about the value here (under most scenarios).
Nobody is missing it. the cashflow should be stable for the next 7 quarters and their debt is now about
$1.05B and their capex should be about equal to their cashflow for the next year. the big question is
what will happen with oil in 2+ years. I personally think that oil will be in a profitable price for LPI.
Time will tell. good luck.
I guess this is one way of looking on it... If you zero out the value of EPI, you ignore the
part into which the company put over $75M (50% of $150M) about 7 years ago and
should be worth much more today, you might be right.
Gamida cell is about $35M in return of shareholder's loan to Elbit if it is bought + 87% of
what stays in Elbit Medical.
You do realize that this debt is secured, so it gets the unsecured bond holders farther down. it might pave
the way later to convert unsecured bonds into shares in order to reduce the debt.
The question will be at what share price it will happen.
I am not short, but it is too risky for me. good luck and hope for you the company manages to postpone
dilution until the share price recovers.
Yes, but the vast majority of the value is in Australia & Canada. the u.s mi has so little
value right now compared to the others. the only way to destroy the value, would be to
sell more stock in the Canada and Australia companies (public companies, in which
Genworth is a majority holder) in order to put it in the dark hole of the LTC.
At this point, the MI holdings are higher than the market value of the company (I assume
cash at corporate is not much lower than corporate debt...).
Genworth's long term care policies were the best bargain for a long time - it was idiotic of Genworth to
price them as low as they did. that part of the business of Genworth is worthless. the value is in the
As far as the policies in place - I doubt your customers will find much value somewhere else (I assume
these are not people less than 35 in age).
Lets update it:
Sector 1: owning 45% of Plaza Centers, who owns 5 active malls which secure mortgages and have
over 70M Euro in excess equity. the company has bonds of ~200M Euro, 4 active projects and more
"non core" parcels (probably for sale...). largest project is Casa Radio in Bucharest, where 115M Euro
have been invested. the company believes phase 1 (large mall and offices) could be finished in 2017.
Plaza also owns in India 50% of EPI who owns:
~100 Acres in Varthur, Bangalore (by Varthur Lake, next to Whitefield - and on the path of the PRR).
~90 Acres in Padur, Chennai (a few kilometers off SIPCOT and OMR).
Some land holding on an Island offshore Kochi.
One of the active malls is in Pune and a sale agreement was done for it in 2013, but the implementation
is being postponed and it has a negative ongoing NOI (mall needs to probably be converted).
that is outside of EPI.
Sector 2: owning 77% of Radisson Blu Bucharest complex and 100% of Radisson Blu Antwerp.
Equity value: 25M Euro for Antwerp, 25M Euro for Bucharest.
Holding 3: owning 50 year lease rights for 10 acres of land on the shore of the sea of galilee (for hotel).
Holding 4: owning 89% of Elbit medical who owns:
24% of Gamida Cell - a company who is to be sold to Novartis (pending milestones that should be
reached in 2015) for $200M plus $435M of future milestone payments.
33% of Insightec - a pioneer in combining MRI and ultrasound to target and heat inside the body in a non
invasive way. last round of investment was at $200M before the $62.5M investment.
Elbit medical has no liabilities outside of shareholder's loans from elbit imaging.
Holding 5: 50% of EPI owned directly.
1. ~$35M loan from Bank Hapohalim.
2. 670M NIS of bonds (~$170M), due in 2019 & 2022. they are at Israeli CPI + 6%/year.
That is the company to the best of my knowledge. current market value is $40M for the equity.
good luck to the company.
Joe, they are in the real estate business and they are working on getting out of there. in order to do
that they need to sell and in order to get a good price they need to be smart.
The Bucharest complex is worth a lot of money and in order to maximize its value for Elbit's
shareholders they need to do this.
Like it or not, the equity in the Antwerp hotels and in Bucharest should be worth a lot for Elbit.
Given time that money will pay for the Bank Hapohalim's debt and some of the bonds
(prepayment using 75% of money left after paying the bank).
Good luck to the company and to us, its shareholders.
Lets wait and see what happens, instead of trying to guess. the shorts could
get burned, but they are willing to take that chance.
I have never been a huge fan of companies like this one (built on the knowledge
and experience in trading of family members who control the company), but I
believe that this is a real company with real profits.
Disclosure: long (probably for the next two years).
Since I believe this company is for real, I also think that organic growth like in
here will be rewarded in a world of declining growth in most sectors. it will take
time, but it will happen.
Years ago I was in your position (beginner's luck). EXXI has close to $4B of debt. in a good year it produces
close to $0.8B of cashflow and it has a growth capex of $0.5B plus 6% cost of debt (~$0.24B).
Add dividend and you will see not much money is left to reduce debt. lets assume their hedges will give
them ~$1B if they were to monetize them today. they still have $3B debt left.
The problem with carrying so much debt is not only the amount, but also the terms. with bank debt (and even
with bonds post 2009) you have many tests and breaking those tests exposes you to a risk.
You might be right about EXXI, but you are paying $400M for an option on oil prices going over the next two
years to over 80. I think it will, but this is still an expensive option.
I would rather invest in less people with more breathing room who will be the buyers of distressed assets
(when capitulation will come - and it will come).
Anyway, good luck to you.
Making the shares of the complex delist from Romania is a step towards taking over 100% of the project
(now they own 77%). in the past Elbit claimed that the hotel complex is worth a lot more than its debt
(total of 10M Euro in 2014 and more in 2015 and it has potential
for improvement (upgrading the part that is only 3 stars now - partially done in 2014).
Lets hope for the best. the total value should be easily 120M Euro as is ( 50M Euro equity).
Market value was representing of enterprise value
Fidelity (FMR) owns 12% of the company. do you think they never looked at the certified financial statement?
The company pays income tax ($3.7M in q2-3 2014, to be exact). the auditors who certify the books have
to verify with the IRS (or the Indian equivalent) that the money was paid. would anyone pay taxes on non
existing profits? where would the money come from?
Usually a sign of fraud is when a company makes money, but yet does not owe taxes. here those tax
payments are actual payments. they are easily verified.
Revenue verification - an elemental part of the audit that they have to pass to have certified financial
By the way, their current interest expense is running at close to $30M/year. once they do the bond deal, they
will pay less than the 13% they are now paying (about what is expected from financing in India - especially
in rupees). if they paid 8%, they would have had $10M more of profits (annual per tax).
Just an FYI.
Look at the scheduled off hire prices in 2015. the revenues will be down in 2015, but there is a light at the
end of the tunnel. the large backlog of new deliveries is mostly over in 2015 and from that point on the
pricing should move more than slightly (box volume goes up in 2016 by 6-7%, new del. less than 4%,
scrapping at 2% = 4% less capacity, finally).
2014 = $203,000/day
2015 = $152,000/day (my guess based on lloyds list numbers).
The 152,000/day could be revised upwards quickly or downwards quickly.
projected revenues in q1 2015: $150,000/day x 91 days (per quarter) = $13.5M
projected amortization of prepaid expenses = -$3.0M
projected operating expenses = -$6.0M
projected administrative expenses = -$1.5M
projected interest expense = -$1.7M
projected depreciation =-$2.6M
bottom line: =-$2.3M
This is based on very recent charter rates. and I take an off hire during 2015 as 1/1/2015, so the
reduction in the leasing revenue will be gradual and if rates stabilize higher this year, the projection
will change (probably upwards from $150,000/day which is very low - includes operating expenses).
Good luck to the company.