IDL - Industrea Limited

[skc]

Looks like the market is pricing in the MS division sale at either a very low cents per share value, or a very low % expectancy of being sold.

As SKC has said, its alot like a free option...not much downside buying at a 2-3c discount to the offer...other than perhaps opportunity cost of deploying funds for a higher return elsewhere.

Any guestimates on value of IMS? or chance of sale?

You can work out the value of IMS but it isn't disclosed what is the GE "reference price", above which the shareholder will get additional value over the $1.27.

The GE $1.27 offer should be implemented around Nov so funds are tied up for 6 months, while return on an entry of $1.24 is 2.4% (5% annualised)... so it's a small cost of carry considering you can borrow at 6.5% these days.

 

[VSntchr]

You can work out the value of IMS but it isn't disclosed what is the GE "reference price", above which the shareholder will get additional value over the $1.27.

The GE $1.27 offer should be implemented around Nov so funds are tied up for 6 months, while return on an entry of $1.24 is 2.4% (5% annualised)... so it's a small cost of carry considering you can borrow at 6.5% these days.

Perhaps some people are speculating that GE will withdraw the offer?

Price down to $1.21 today. Is there any clauses that GE can use to get out?
Return is now at 4.9% and the time-frame is shorter hence annualised return is looking pretty juicy...

 

[skc]

Perhaps some people are speculating that GE will withdraw the offer?

Price down to $1.21 today. Is there any clauses that GE can use to get out?
Return is now at 4.9% and the time-frame is shorter hence annualised return is looking pretty juicy...

Haven't been following that closely but I sold out when they released the trading update downgrade. It's just a cautious thing for me - even though I don't know that GE has a get out clause, I know that the chance of them selling the unit above what GE is willing to pay is much slimmer. Without the "option" value, it wasn't worth holding until the conclusion of the deal.

As to whether GE can get out... deceide for yourself.

Termination events
Without limiting any other provisions of the SIA, the SIA may be terminated:
(Industrea Material Adverse Change) by GE, if an Industrea Material
Adverse Change occurs prior to 8.00am on the Second Court Date;

Industrea Material Adverse Change means Specified Events which, individually or when aggregated with all such events, occurrences or matters could reasonably be expected to
result in a material adverse change which is reasonably likely to negatively impact on the
value of the business, financial condition or results of operation or prospects of the
Industrea Group by at least the Threshold Amount

Threshold Amount means:
(a) between the date of the SIA and the date on which IMS Sale Completion
occurs, $35 million; and
(b) thereafter, $25 million.