Will you be chasing the rally from Friday's catalyst?
Or are you positioned for Friday’s high buyer probability? Cheap price will be chasing imminent upside.
Appraiser said they have been approached by potential buyers before and court monitor beliefs they will have at least two to three buyers.
When you are calculating the full valuation be aware that the Monitor reports asset numbers that pertain to the issue at hand. Court assets reports don't show full buyout valuation. The Monitor understands that more comprehensive numbers will be presented to interested buyers.
“BioA's Company’s assets are comprised of its 30,000 Ton capacity Sarnia production facility, inventory, accounts receivable, trademarks, patents and other intellectual property, tax loss carryforwards (NOL), and other moveable assets.” bioamber-009_060718.pdf
Some assets will be missing from previous reports because they need appraisal or are up for negotiation during sale.
Last February, Nexant estimated the value of the Sarnia plant alone as an operating facility to be within the range of US$53.8 - 73 million (70-95 $Canadian). But for creditors considering the DIP, he limited the assets to relevant numbers just to demonstrate the difference in value with the DIP and without it. The court Monitor used the lowest plant valuation (CAN$70) on the DIP report and doesn’t include intangibles, nor forward revenues or other items that a buyer might consider.
Valuation in US$
After converting into US dollar and using the most recent docs (June13 + Nexant) I get:
Inventory $2.4
Cash $0.4
A/R $1.7
Patents $5+
At least 1yr Forward Revenue $20 from their active order pipeline (some add 2yrs)
3 yr. old Plant at $70+ premium due to more than one bidder
Debt: $49
Equity: $18.9
Total Assets: $99.5+
Equity: $50.5
Fair Value per Share: $0.38 +
Additional Considerations
Having an active customer list should also be appraised and added in the sales price.
I won’t include the NOL ($.31) because that would limit bidders to agree on a 49% merger instead. Cash and account receivables can increase from recent succinct acid sales and production.
Companies may also give more value to certain things some of which the Monitor presents like:
New Plant Construction cost: US$141M (2015) Replacement cost of facility: US$175- 185M
Top-line growth of US$4.68M representing a 750% YoY increase between from Q4 2016 to 2017
Increased demand for the product has been seen since oil price ramp up from 30$USD/bbl. in January 2016 to 70$USD/bbl. Today. Some say trademarks, patents and intellectual property is more valuable to some.
Bidding War
Obviously if there is a bidding war among several interested buyers, the sale price can increase. Nextant reported back in February that a few companies investigating potential to produce their products in the Sarnia asset already approached BioAmber. The monitor reported they already have 20 bidders signing NDAs.
“The Monitor, with the help of PwCCF, will continue the ongoing SISP and will work with the Company’s management in preserving enough cash to ensure that the SISP can be concluded. The restructuring plan will help to preserve value for all stakeholders.”
