Completely agree - whenever the TRS share price falls I rerun...

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).