Here's an interesting short: SCTR, Speciality Teleconstructors. Formed to build cell towers, now merged with a Hick Muses company to own and lease his towers. Among the red flags:
1-insider selling: budagher, former ceo od sctr and now coo ofÿ the combined copany, filed to sell 200,00 shares on june 24. this info is not on yahoo but it is done. tommie carpenter also filed to sell 100,000 shares, one of the owners of a company sctr bought last year.
2-huge runup after merger announcement:Omni-America consists of tower assets that were purchased for a sum total of about $115mm ($75mm for original assets plus $38mm for recent Arch towers). So basically assets that Hicks-Muse bought for $115mm are now being valued by the people who are paying up for the stock here at $380mm, or $265mm more than Hicks-Muse paid for them. never a good thing to be paying more than a buyout firm.
3-incredible valuation: shares trade at about 125 TIMES estimated after tax cash flow. and the only estimate is from alex brown, who picked up after the merger was done. the report is total fluff. on a comparative valuation, it is just as ridiculous. Their nearest competitor, LCC International, trades at a much lower valuation.
LCC now has more towers than SCTR, plus another real business that generates significant cashflow (~$25mm EBITDA), and still has 1/2 the valuation of SCTR.
4-sandbagging shareholders: on the most recent quarter they did not put outa press release, just filed a 10Q. here are some quotes from the 10_Q:"...As the Company focuses its resources on tower ownership, revenues fromits construction operations are likely to decline. Management believes thatthe decline in revenues from its construction operations will be mitigatedover time by the recurrent revenue stream expected from tower ownership,including revenues from the transmission towers acquired in the OmniAmerica Holdings Merger."
Now keep in mind that in 9/97, when they released their fiscal year, the then CEO, Budagher said, "...we did see demand begin to slow somewhat during our fourth fiscal quarter....we believe the slow down has continued into the first quarter of 1998."
And they said from the 2/97 10Q "Management believes the decrease in
revenues was due primarily to unusually strong demand for the company's wireless infrastructure components in the comparative quarter last year and to Management's decision to concentrate its efforts on improving operating efficiency by, among other methods, reducing the number of projects it undertakes using primarily subcontracted labor."
Translation:
So the PCS buildout dries up and...
And then they suddenly announce they are merging with OmniAmerica, the Hicks
muse company? Sounds pretty desperate to me. |
