tpi target price

Unless the $1.20 entitlement offer has a future dated record date there is little doubt TPI will reopen below the current $1.80.

As an existing shareholder I'm trying to put some value on the $1.20 offer and the future of TPI's SP.

Shares on issue to look something like this:
Currently 280m approx
WP $65m @1.80 36m approx
$735m @1.20 613m approx
Total 929m approx

1H09 NPBT and abnormals of $98m approx. Assuming these tough times continue TPI is likely to deliver approx $200m in NPBT and abnormals for 12 months. The benefit of TPI's $800m capital raising is that it will pay down expensive debt - based on the Feb presentation it looks like debt has an interest rate of approx 9% (due to hedge).

Reduced debt should reduce TPI's interest expense by approx $70m pa so it might be possible for TPI to generate $270m+ in NPBT pa.

That kind of profit and reduced debt could justify a market cap of $2.7b+ or a SP of $2.90 based on 929m shares on issue.

TPI asset write downs have been and are likely to be:
* Poor hedge decision already reflected in higher interest cost.
* Substantial fall in CMA SP which TPI has a large interest in.
* Likely write down in some overpaid assets purchased in 07/08 which were inevitable.

These are all one-offs and are unlikely to impact the company's future earnings ability.

So I'm thinking the $1.20 entitlement is worth picking up and a target SP of $2.90 within 6-12 months not out of the question. Past record date for entitlement we are likely to see SP open around $1.50 however a future dated record date could see SP open around $1.80 to $2.00.

This is only my opinion and these figures may be inaccurate so please do not make any decisions based on this information. My post is to find out what others think of my assumptions.

We're almost 3 weeks post letter to shareholders re capital raising so SP should open up again soon assuming all is going to plan.