Quote:
Originally Posted by trade2win
Thanks for spotting that, for some reason I missed it. That is certainly not a good sign. They still own about 130k square feet of other real estate in major cities though. Some of that is TV studio's they probably won't need at all going forward. If they sell the townhouse for $15m , that is $11k per square feet. Take another $150 per sq feet for the rest and that is $20m, or $35m total.
The reason I think results could be partially sustainable at least is that Q3 was weak, and the bump happened in Q4. Their AIRE segment could easily be $10-15m+ in ebit with 50%+ margins, and so far they had not been very good at monetizing that.
And there is not much incentive to throw this into liquidation? I guess we will see.
If they would issue 100m shares at $0.50 per share, and get like $25m for the real estate over the next year, and a further $10-15m from operations this year, and assume they need about $10-15m for working capital needs, they could reduce debt by $95-105m. If they refinance at 10%, and EBIT would be $55m going forward (it is about $70m if you annualize Q4), that is $20m of FCF to equity holders. Apply a 7x multiple on that $20m and that is $1.32 per share.
Then three years out, they reduce debt by a further $55m, Now liabilities are $275m. Then assume ebit is $50m. If they would refinance they could then reduce interest to 7% or ~$20m. Apply a 8x multiple on $30m and you get $2.4 per share.
If EBIT stays at $70m due to Trump presidency for the next year or two and then reverts to $45-55m, it would be even better.
The 260m in NOLS should provide some incentive to not wipe out the equity as well? A big discount should probably be given due to management though.
Another interesting radio stock is Townsquare media, they have a large live event business attached that should see nice growth, and I think currently FCF is about $55.