Greetings.
The end of the first page of the announcement also notes that the buyback will be funded from cash reserves. Network Investment Holdings doesn't even have to outlay any cash!
I wonder what the independent expert will of the value of the company if the best use of its reserves is to buy out the minorities - 42% of the shareholding.
Employee costs as a % of revenue have come down from 50-70% in FY07 to 34% now, and cash receipts as % of revenue look quite good.
With a 5% revenue growth assumption and holding costs constant I can get an EBIT next year of $1.126m while still Op Cash positive.
Leaving cash where it is now ($4.643m (not 4643m below(ooops, apols))) and using an ebit mutiple of say 5x, that says value of the Company is
12m shares into 1.12x5 + 4.6m = $10.2m fair value around $0.85.
$0.70 is a 20% discount.
Need to do a little more work, as this is a selective buy back, of which the minorities are the beneficiaries. Unlike other transactions, Network is not conflicted/excluded from the main vote. The vote of a person benefiting(us) cannot be counted, but the class of persons affected (us) have to agree.
Is there value in getting a shareholders list and writing to shareholders demanding a no vote for a higher offer?
f111
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