Obviously there are some positives when you wipe out almost all of your debt with new equity, but the cost is immense, which is fair value per share likely drops from $0.16 to $0.09 on this maneuver (massive dilution offset partially by debt reduction). Had they forced Suncorp to pay up, they'd be touting $70 mil. in EBITDA for 2025 and all debts refinanced without an equity raise, fair value would have risen in that scenario from $0.16 to $0.25+. That is exactly what should have happened here, even if AMA had NOT given Suncorp $400 mil. in cash back in 2019 for the privilege of being their preferred repairer. LOFL.
Instead, Suncorp says "sorry guys, it's just not in our budget, maybe next year..." and we say, "ok Steve and Lisa, thanks for considering it, I guess if you can't afford to pay us any more than you are we'll just have to go back to our shareholders and get more cash so we can barely breakeven a free cash flow basis, but hey what matters is we get your cars fixed so your policyholders don't get mad and leave you. Even if we make no money on it, we're happy to do it because we're your preferred insurer right? Oh and congrats on your Suncorp stock hitting all time highs. We hope your shareholders appreciate our sacrifice in that regard."
AMA Price at posting:
5.1¢ Sentiment: Buy Disclosure: Held
