This is ripe for a buyout / Take over and it is a little bit spekky.
The following research is from our resident Telco Expert Grant62.
Do some research on this and read the past announcements.
Some quick pointers: 1) The Downtown Utilities syndicate comprises Energex, Energy Australia and Citipower. 2) Downtown Utilities' owns ~30% of PWT. 3) Energy Australia and Citipower are smembers of Utilitel. 4) UEC is also rumoured to be a member, along with PWT. 5) There was some speculation late last year /early this year of a grand alliance (ie: take-out) of the 3rd tier players (ie: MAQ, PWT and UEC).
6) Some of my own postings from October last year also mooted at /supported a tie-up between these groups. 7) UEL is known to want to exit from UEC asap, provided that the price is right. Mooted conditions for UEL to exit:
pay-out /pay down of the current loan facility (curently at, or about the $25m mark, post Lucent settlement); and
an exit price >30c.
8) Accounting for 335m out of 505m shares on issue (ie: 66.23% of the issued capital), the key to any take-out is securing UEL's stake. Therefore, it is a question of securing the right price. Set @30c, UEL stands to pick-up $100m from exiting its UEC stake, plus repayment of a further $25m on the current loan facility. Conversely, @40c, UEL stands to make $134m ($160m, proportional Enterprise Value), whilst @50c, UEL's pEV is $193m ($168m + $25m).
9) The more likely outcome, however, would be for Utilitel to acquire UEC (query: PWT), and for UEL to take a stake in Utilitel. In this way, the offer price for UEC could be cast higher (ie: thereby ensuring the success of the bid) whilst the muted impact could be blunted through UEL emerging with a 10 -15% stake in Utilitel (@ an ~ cost of $50 -$60m).
