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Technology Stocks : BACKDOOR, an IPO> IDTC,BRKT,BNYN,KLOC,NAVR
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To: steve host who wrote (179)1/27/1999 3:48:00 PM
From: peter michaelson  Read Replies (1) of 954
 
steve, all:

I find this UIHIA deal very interesting and would like to get the calculations straightened out more precisely.

First, looks to me that the IPO is by UPC, and the cash will go to UPC, which will be used to pay down debt and other purposes. I don't think UIHIA will get any cash from the IPO.

OTOH, since we can use a market price of UPC to value its assets and liabilities, we can split UPC out of UIHIA's balance sheet. Last reported UIHIA debt of $1.8 billion (??) can be reduced by $1.3 billion(??).

Perhaps the best way to value is to guess the percentage of value that is UIHIA's holdings other than UPC - basically UAP )Asia) and ULA (South America). I'm guessing 80%.

Now, we know that UIHIA's value in UPC stock is 77 million shares times $30, at the offering. That's $2.3 billion. If this represents 80% of value, total value would be $2.7 billion. Divide by 40.4 million shares for a value of $66.50 per share.

Caveats:

Normally one would apply a discount to the UPC holdings as there is no liquidity, and selling the shares would deflate the price. This is a major issue. A 25% discount and a $30 UPC price would put the UIHIA value at about $52.

Some assumptions are guesswork.

For every $5 change in UPC price, adjust the UIHIA value by
almost $10.

For every 5% change in the % of UIHIA's value that UPC represents, adjust the UIHIA price by about $2.50.

Please correct my errors. peter
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