The rest of the company is ripe for takeover now. It just does not have the scale to justify being listed as a separate entity. I expect that WPP and the likes will be circling.
Re value: very rough, back of the envelope calculation:
On the liability side, it still has $15 million in earnouts (offset by an equivalent amount of cash, PLUS the tranche 3 deferred payments (which we dont have an up to date value on, but is probably around $80 million).
From the numbers we were given, the remaining business are running at roughly $25 million in EBITDA for FY12, so based on their recent average sales multiple of 7.5 times, you get roughly $190 million enterprise value, or $110 million after paying out all liabilities.
I recall total shares outstanding were about 1,500 million, so net value of of 7.3 cents.
However, my gut feeling is that this understates it pretty substantially, because (unlike the sold businesses) the earning capacity of the remaining businesses is at least twice the current earnings. I think this could justify a multiple on the current base of around 10-12 (or a multiple of 5-6 times peak earnings). This would give an enterprise value of between $250 and $300 million. Net of debt this is $170-$220 million, so somewhere between 11 cents and 15 cents per share.
DYOR
PGA Price at posting:
$1.08 Sentiment: LT Buy Disclosure: Held
