is share buyback the solution?

BRS in a situation not often seen on the ASX. On friday the stk closed at $1.075. Yet BRS is under a TO offer priced at $1.35. How can this be? Its mainly because the TO is conditional of a minimum of 50% of shares being offered to the predator outfit and it is clear that this target has been far from filled.

The BRS board is hotly contesting the TO and argues the company is well on track to have an EBITDA in 'excess of 300m in FY17'. This equates to aprox 15.8c eps. Plus BRS state their firm is worth between $1.65 - $1.85 per share, and on more than one occasion urged shareholders to not accept the offer at $1.35.

Another reason the SP trades 25% below the TO price is the most lucrative contract has yet to be renewed despite months of negotiations. This contract is currently held by BRS until 28/02/17 and the renewal period is for 5 yrs. The Fed govt has now re-introduced a 2nd bidder into the negotiations and the outcome is not expected to be known for some time.

We don't know who the successful bidder will be. We do know that the earnings from new contract will contract by about 50%. Clearly a substantial difference. I estimate BRS are about a 70% chance to win the renewal at the new terms. But until 28/02/17 the current, more profitable terms, remain in place.

BRS management know all of the above and they still urge holders to keep their shares and not sell. My argument is: If BRS believe their shares are worth $1.65 - $1.75, i.e. are undervalued by 53 - 62%, then surely buying back BRS shares is just about the best investment around?

So I'll read the HY on Monday with interest and look for justification from BRS CEO as to why we should keep rejecting the TO. If the HY report demonstrates the SP at $1.075 is severely undervalued then surely a buyback starting immediately is a good investment for our company. Not long to wait.