Examining Lavalin’s £20.8 expression of interest valuing Atkins £2.08bn sticking with a 7.6 multiple… Based on yr. ended Mar 2016 financials £20.8 per share (100.11 mm shares outstanding) breaks down as follows:
£13.2 EBITDA enterprise value
£4.2 cash on hand
£3.2 50% reduction in overhead calculated at 4.5% of 2016 revenue
Lavalin’s reserving the right to bring a lower bid is attributed to the Atkins pension deficit, however, and as identified previously, its balance sheet provides a credit advantage in absorbing pension deficit of a target(s)… Beginning with a £215mm Atkins competitive paydown (£2.15 per share) divided by 7.6 multiple produces an EBITDA equivalent of £28.3mm (vs 2016 contributions of £32.8mm. Increasing this by 2.5% …show more content…
The combined entity might also enjoy a boost to profitability/cash flow after 2025 assuming sustainable pension schemes result from Atkins recent actuarial settlement. A £0.7 per share PV is based on 2016 deficit funding of £32.8mm and 12% discount rate. This benefit would drop to £.18 if ROE were to double to 24%, however.
Though Lavalin is the best strategic fit for ch2, leadership of these organizations not share or appreciate this view, but a SNC-ATK combination will effectively strip ch2 of its best and, perhaps, its management’s alternative of choice and Ch2 might benefit from display of humility.
Acute Liquidity concern:
Though no trading will be based on TTM ended Q1, its impact on already thin liquidity position is emphasized and the possibility that exploration of refinancing alternatives includes debtor in possession financing and priming the bank group (borrowing funds secured by a lien equal or senior to the existing) to ensure adequate funding for future operations is
£13.2 EBITDA enterprise value
£4.2 cash on hand
£3.2 50% reduction in overhead calculated at 4.5% of 2016 revenue
Lavalin’s reserving the right to bring a lower bid is attributed to the Atkins pension deficit, however, and as identified previously, its balance sheet provides a credit advantage in absorbing pension deficit of a target(s)… Beginning with a £215mm Atkins competitive paydown (£2.15 per share) divided by 7.6 multiple produces an EBITDA equivalent of £28.3mm (vs 2016 contributions of £32.8mm. Increasing this by 2.5% …show more content…
The combined entity might also enjoy a boost to profitability/cash flow after 2025 assuming sustainable pension schemes result from Atkins recent actuarial settlement. A £0.7 per share PV is based on 2016 deficit funding of £32.8mm and 12% discount rate. This benefit would drop to £.18 if ROE were to double to 24%, however.
Though Lavalin is the best strategic fit for ch2, leadership of these organizations not share or appreciate this view, but a SNC-ATK combination will effectively strip ch2 of its best and, perhaps, its management’s alternative of choice and Ch2 might benefit from display of humility.
Acute Liquidity concern:
Though no trading will be based on TTM ended Q1, its impact on already thin liquidity position is emphasized and the possibility that exploration of refinancing alternatives includes debtor in possession financing and priming the bank group (borrowing funds secured by a lien equal or senior to the existing) to ensure adequate funding for future operations is