BKN (ASX) Where did sellers come from?

Originally posted by MarkieMills ↑

I think it has been significantly an emotional response, as the AGM reminded everybody that the CEO and Chairman have resigned. You can imagine the shareholders felt like they were seeing ghosts. Also the remuneration report was voted down as a first strike.So bought the dip - see how things go.

Also in the outlook at the FY results gearing was said to materially reduce in H2 16, now they are saying significant gearing improvements in FY17. A difference there.

A big positive is that there has been no change to the story about baseline $800m revenue. Looking at this level of revenue, you might have a fall in net receipts to around $110m, after further restructuring costs. Out of this you might have $15m stay in bus cap ex or so (for a short period), and $30m interest, $5m tax. So the free cashflow might be around $60m per annum during the lows of the cycle. It should even be higher with significant right sizing. So that will be adequate to keep the $400m net debt lenders happy with debt reductions you would expect.
With an EBITDA of $109m (20% down), you are at a high level of leverage, at about 4x, which would be outside normal covenants for that debt, but you will be within normal covenants after 18 months of debt repayments, if no dividends are paid. After that point the divs could be as high as 35 cps!!! SP is looking slightly oversold - lol.
Not suggesting it will play out like this, just what the maths look like to me roughly on my tiny scrap of envelope.

DYOR - don't rely on me.

Expand

My back of the napkin calculations are similar to yours. On $800m revs I see EBITDA between 104-112m. Unlike you however I don't see them paying a dividend that quickly, it may take 2-3 years.

NTA/share is around $1.70, forward p/e of 4

Current share price of $0.68 seems extraordinarily cheap no matter how i slice it, although debt still remains a concern to some extent.

I feel really bad for the longer term holders. I believe the Board could/should have been held legally accountable for their negligence in handling takeover interest over the past year, but seems that will not happen.

My average is $1.01, so I actually hope for more emotion driven selling / shorting so I can average down further.