Assuming every bit of distribution goes across to Coopers in two years (far less than the agreemeent stipulates), you'll have earned about 40% of your outlay in those two years out of FCF.
For the remaining $65m odd, you'll free up approx. 25% of your inventory, turning into cash ($25m). Let's say $20m to be conservative. You'll likely free up some WC in the form of receivables too, but let's ignore that.
That leaves $45m, and roughly $20m in debt (that is easily serviceable)
The business is set to do over $400m in revenues - about $300m without Coopers. There would definitely be room to trim excesses if your volumes fall by 25% (employees, warehouse space, distribution costs). Even at a 3% EBIT margin, you've easily justified that cost.
I see very little downside here. It seems the market simply thinks the Coopers announcement is bad (agreed), but doesn't read beyond that.
The most important point - it's hard to lose money from here.
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43.0¢ |
Change
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Mkt cap ! $57.67M |
Open | High | Low | Value | Volume |
42.5¢ | 43.0¢ | 42.5¢ | $23.29K | 54.67K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 9624 | 42.5¢ |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
43.0¢ | 48028 | 3 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 9624 | 0.425 |
1 | 20000 | 0.420 |
1 | 87000 | 0.405 |
1 | 2534 | 0.395 |
1 | 10500 | 0.390 |
Price($) | Vol. | No. |
---|---|---|
0.430 | 48028 | 3 |
0.435 | 8987 | 2 |
0.440 | 12350 | 2 |
0.450 | 50000 | 1 |
0.460 | 16000 | 1 |
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