Courtesy of TheGodfather on i-hub (this is practically everything you need to know about
ABWTQ):
"Abitibi DD sheet
The economic crisis has hurt many industries and the newpapers haven't been the favorite of the true leaders of the world (Yes, I am talking about The Bilderberg Group)
If I was looking at one company that would come out the most successful after the economic crisis, this is it.
Looks like the markets are generally improving.. we see the Dow hovering around the 10k position which IS a big deal.
Look at newspapers and newsprint users.. there stock values have gone up about 8 - 10 times in the past few weeks.. LEE for example. Do check out LEE. Damn, I feel I pull the plug from every stock too soon!! (not this one, hopefully)
Abitibi which has not been profitable till now has suffered with the other companies.. but here is a DD sheet as to why owning Abitibi shares might just be the biggest payoff ever. Ok, enough dwelling about the past, lets see what Abiti has for us this last quarter.
To start the story with, here is a snapshot of the latest MOR: Assets - Liabilities >
$13 Billion and a low OS of 57 million. What does equate a shareholder equity of? Well, if they liquidate everything today and get 100% of the value for their assets, each share is worth $228 and from a practical point of view, even if they only 50% for all their assets, after paying the liabilities, each share is still worth $70. Talk about getting a deal for 25 cents.
Well, what about the future revenue generation? The reason the share price got beaten down was because of losses Q after Q right? So, how does the future look? Very promising to say the least.. Why? Read on..
BIG MONEY COMING IN
How you may ask? Well, Ladies and Gentlemen
1. Asset sales.
Hydro power generating station being sold for $615 million.
http://ca.news.finance.yahoo.com/s/04092009/2/biz-finance-abitibibowater-finalizes-615-million-deal-sell-quebec-hydro.html
They are also selling an idled plant in texas for about 20.5 million which will also save them about 3 million a year in maintenance costs.
http://www.wealth.bloomberg.com/apps/news?pid=20601082&sid=akf7Hg3L893o
They recently sold less than 1% of the land they own for about $54 million.
2. Shutting down mills cuts down costs in many ways. One, the cost of maintaining the plant goes down. Two (sorry for the people who are out of work now), save money by job-cuts and employing less people.
3. They are cutting down inventories and reducing production to ensure they maintain the price by keeping demand-supply equation well balanced. ( Every other newsprint maker is also doing this)
4. They have a ton of inventory for lumber and here is the link for that analysis. Nearly $1 Billion in lumber thats unused currently sits in the mill waiting to be sold.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=42208337
5. Reason why they will win the fight against Newfoundland in the expropriation case. Basically, NF Danny Williams kicked Abitibi out and shut their mills without any compensation which is a clear violation of the NAFTA treaty but how can a local politician understand the international effects of his actions? About 250 million expected from this case.. CASH.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=41856670&txt2find=NAFTA|case
6.Black liquor credits soon to be establish by Canada to be worth around $400 million/year to Abitibi and they recently obtained $33 million from the Canadian government.
http://fftimes.com/node/228227
7. Newsprint and lumber prices creeping up.
8. Increasing demand from India and China.
9. Deals negotiated and done with labor unions and this is beneficial to both parties.
Nice summary by dav here..
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=40395064&txt2find=MOR|abwtq
So total money coming in now =
Asset sales ~ $750 million
NAFTA case settlement ~ $250 million
Black liquor credits to be introduced in Canada ~ $400 million
Money saved by shutting down mills and cutting jobs.
Money from continuing operations of sale of newsprint/magazine paper/pulp/timber.
NOLs tax credits worth more than a billion dollars (need to check on the exact number)
All this added together is enough to ensure they pay off all their present debt and easily come out of Ch11, which they are planning to do next Q.
Now the kicker.. All this is excellent news but this is the icing on the Abitibi cake..
BIGBOYS (FAIRFAX + STEELHEAD + management own/control over 80% of the 54.6 million common shares and FAIRFAX is the lead on DIP financing and they aquired their shares @ $10 each ($350 million convertible loan)
As utmost explained in his chart earlier and was
pissed about it, there is IMO a HUGE short position in this as is evident the way they kept the price so low all these days..
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=42054191
Now, with all these ingredients added together, we get a very tasty recipe. 80% of the shares are locked up.. Low OS..Lower float.. Huge news.. Huge short position.. all the ingredients to make this run biggly!!! How big.. I don't know, its like the Matrix, you would have to figure it out for yourself!!
Till then, Bon Appetite and enjoy the ride here!!"
-- $13B in shareholder equity after all their liabilities, market cap is currently $12M ... hmmmm, looks like we're missing a few 0s somewhere :think2:
hno:
