CCME - I agree that the public markets were unattractive in early 09, but with $29MM in cash at that time, what was the need to go public in the first place? Additionally, the SPAC wasn't consummated until Oct 2009, they weren't forcibly *bound* to anything until then, they could have pulled out. At that time, I can assure you that the IPO and PE market for Chinese companies was very healthy and vibrant. If they were what they claimed to be at the time, they could have done infinitely better by looking elsewhere. This junky little RTO SPAC they accepted was a total screwjob. Not sophisticated at all--unlike VISN, AMCN, FMCN, CHRM, and other key media players that have gone public in the US.
Sure, the company CFO/IR will have an explanation for us as to why they did this. But how persuasive is the explanation? Not very persuasive IMO.
At a minumum, it shows really bad entrepreneurial judgement, in addition to a lack of patience. Is it that much of an urgency to go public when you have $29MM in cash, no coming capex needs, and the best you are offered is some nosebleed sub-RTO valuation?
They pissed away a ton of value for no reason at all. Do you want to invest your money with them? Maybe you do, given how cheap the shares are relative to earnings. As for me, I'm going to at least wait for the 10-K.
As for the argument that they overestimated their capex needs, what did they think those capex needs were going to be? All they have to do is put the LCD's on the buses. That's $329 per bus, $658 if you assume two screens per bus (which they don't normally do--the average was like 1.4). 27,000 * $658 = $17MM max. They had $29MM then, at the end of 2008, enough cash to cover their future capex needs many times over. And we're not even mentioning all the cash that they were generating from operations.
I just don't buy this whole "we overestimated our cash needs." It doesn't check IMO.
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