I take back what I rashly said about ELAM. If we can get it at near the bottom of Friday's trading range, which hit the $4's, it is a spectacular value.
The Plexus deal represents about $3.50 per share in non-recurring gain, it seems, having received $51 million cash for Net Assets sold of $24 million.
This leaves cash of $38 million and debt of $14 million. Total shares outstanding are 6.8 million. Net assets will be about $85 million, and worth who knows what?
The deal reduces gross income by about $6 million (Plexus paying 10x GP pretax!), putting future net income in substantial doubt. Nevertheless, they are not playing with fairy tales down there - the whole business is about as pragmatic as you can get. I think they'll have a game plan.
To my mind ELAM management has demonstrated that they are dedicated to the task, understand how to get good money in a deal, and have hidden value lurking in their operations.
So, ELAM has the full share price in net cash in the company, plus lots of other book value, plus a history of profitability - that is too good to pass up.
peter |
