MNI
Thinking about buying some more as this drops. With the refinancing at the end of last year, I think the debt is no longer a problem going forward. They have the cash to pay down the 2014 maturity when it comes due, ample excess free cash flow to take care of the 2017s within 2 years or so, and then nothing comes due until 2022. They should be able to refinance the 2022s at rates much lower than 9% as they reduce the principal.
Meanwhile, nobody is paying attention to their digital investments, which are doing extremely well, growing net income at about 20% annually. If and when Cars.com and Careerbuilder go public, they could easily trade for 20x earnings. For now, the major shareholders GCI, MNI, and Tribune are using dividends from these investments to pay down debt, but we could be approaching a point where it makes more sense for the companies to go public and the shares to be spun off. GCI has dug itself out of its debt problems, MNI is almost there, and Tribune has almost completed a restructuring.
At the current rate of growth, I think we can reasonably estimate that MNI's stake in the two companies will be generating $100m of net income. That stake could be worth $2B if spun out to shareholders. In five years, MNI's debt should be cut in half, and the core business will be stable enough to handle the debtload without the extra dividends. Current market cap is less than $250m.
