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Strategies & Market Trends : Value Investing
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To: Allen Furlan who wrote (12063)2/17/2001 7:42:04 PM
From: TimbaBear  Read Replies (1) of 78688
 
Alan....Alterra

Preliminary look gives a negative NetNet valuation of -$16.72/share.

The good news is that they have been actively embarking on a scaling back of expansion. Holding for sale some of the completed and operational units along with some of the units still under construction. Also they are apparently in the final stages of selling out their share of some very costly joint ventures.

The bad news is that they are extremely burdened by debt. I get 1.0954 BILLION in debt plus 893.7 Million in "Sale/Leaseback and synthetic lease financings" which would mean to me that they are acting as the bank and holding the mortgages on some of the units they have sold.

I have a projected interest expense (on the Long Term obligations only) of about $93.85 Million. For the 9 months of their last 10Q they had gross revenues of $341.18M on which they lost money with only $52.3M in interest payments for that 9 month period. So this is a debt expressway to more debt.

I don't know how much reduction in debt can be achieved through the sale of the "for sale" assets, but this is definitely a high risk speculation you have here.

I don't know the complete terms of your bond. But, apparently they are convertable at 34.8 shares/thousand dollars. So, let's see.... at a current share price of $1.20, that makes $41.76 dollars back for every thousand dollars of bond face value. Or about 4 cents on the dollar.

Also, the 10Q says that the debt instruments have a default clause that basically means if one is in default, they all are.

Looks like a house of cards to me. If I could buy the bonds at less than 4 cents on the dollar....maybe.

But I may be looking at this all wrong, I'm not a bond speculator.

Timba.
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