Completely agree - whenever the TRS share price falls I rerun the private equity case. At $5, the economics of a P/E deal are unbelievably strong and TRS is sitting there with an open shareregister and strong cashflow just waiting to be swallowed up.
Here is a brief summary:
- The following is based on a standard 30% acquisition premium, or $6.50 (don't worry, the economics below show that they can pay a lot higher)
- The comments I made earlier about leases are important, as we can now assess debt capacity on a lease adjusted and non lease adjusted basis.. A private equity buyer could comfortably lever TRS to 3x debt/EBITDA on a lease and non lease adjusted basis. This equates to about $130m of additional debt;
- Accordingly, a private equity buyer would outlay $6.5m*28.9=$188m less cash ($14.8m) less additional debt ($130m). Accordingly, their initial cash outlay would be only $43m.
- Given this, even if they can only grow EBITDA to a meagre $45m-$46m over the next 4 years, and pay themselves a dividend of $25m in year 2 (to maintain debt/EBITDA at about 3x), they should still be able to exit at the end of year 4 with an IRR of ~45%. This assumes an P/E exit multiple of 12x.
- Importantly, the above assumes negligible growth in EBITDA over the ownership period, so they have the ability to pay well north of $7 and this will no doubt be in the minds of the wholesale investors if a bid emerges.
Overall, these are fantastic economics and given recent press that a number of PE buyers have already run the numbers on TRS, I can't imagine they will be able to resist for much longer at these prices. In any case, it should ease the minds of those with a nervous finger on the sell button (but I'll be happy to pick up more below $5 if the selling continues).
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Last
$6.68 |
Change
0.020(0.30%) |
Mkt cap ! $249.6M |
Open | High | Low | Value | Volume |
$6.66 | $6.68 | $6.66 | $702.7K | 105.3K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
10 | 54279 | $6.67 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$6.68 | 46708 | 9 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
10 | 54279 | 6.670 |
7 | 13734 | 6.660 |
13 | 34901 | 6.650 |
8 | 25743 | 6.640 |
3 | 10175 | 6.630 |
Price($) | Vol. | No. |
---|---|---|
6.680 | 48871 | 10 |
6.690 | 13300 | 6 |
6.700 | 40731 | 6 |
6.710 | 18 | 1 |
6.720 | 2976 | 1 |
Last trade - 14.06pm 25/06/2025 (20 minute delay) ? |
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