As I read the investor presentation a few things occurred to me. In no particular order:
n This is what happens when you combine valuable fiber assets with an ice cube.
n Why the legacy CTL assets should be sold or spun off in a tax efficient manner. I guess they did try to sell it and failed to get an acceptable valuation.
n That the LVLT decision to do a partial stock deal to be acquired by CTL was a major error of judgement.
n I noted that slide 19 has a typo. The word “historic” should be “historical”. No big deal
n THAT THE VALUTION DISCONNECT IS REAL. But as currently constituted an outright sale without fixing the problematic nature of the legacy CTL assets is unlikely. This is why a serious discount to a sum of the parts value applies. Who would adopt the baby when it has two wooden legs?
n I’m glad that they are serious in terms of identifying the valuation issues.
n Perhaps the gating issue related to any spin-off is the amount of debt the spun off assets could support. If it is 2.5x then the debt that would be assumed is $15 MM. This would leave legacy LVLT with $18MM (6x EBITDA). This is perhaps too high given that it is likely that all debt would be required to approve any transaction.
Anyway this is all interesting and something to think about while the stock diddles around in the $10 range.