Author Topic: AIM.TO - Aimia  (Read 91722 times)

Aqul

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Re: AIM.TO - Aimia
« Reply #370 on: November 30, 2018, 09:39:09 AM »
...indicates they are looking to unwind the assets rather than turning it into an investment vehicle. I honestly prefer that...

Do you have a good handle on exit/wind-down costs if they liquidate?  Air Canada will pick up much of the administrative/customer support staff, but will leave in place much of the very expensively-compensated mid-level and senior level management.

Just looking over their financials - there appear to be quite a few one-timers that will add up:
1) they have lease commitments of $67m - perhaps AC will might pick up the call centre lease, but I'm sure they're not picking up the HQ office lease in downtown Mtl or the other satellite office leases around the world.
2) they also have commitments for technology infrastructure of $123m and marketing support of $112m.  From a quick glance, these look like cash costs they are paying every quarter.
3) I'd have to look at the mgmt info circular - but we'll have to factor in executive separation costs as well as stay bonuses for key personnel during the wind-down period.  But a placeholder of $30m-50m might be a good SWAG til those details are released by the company.
4) In pension and other liabilities, it looks like they've booked a dividend accrual for the common dividend they declared but cancelled in mid-2017 of $30.5m.  It makes it sound like this is a cash commitment beyond the unpaid preferred dividend accruals that they will have to pay to shareholders of record at that time before they can make any liquidating distributions to the equity.  So if you bought after June 2017, that cash isn't coming to you but to a shareholder who sold to you.
5) Finally, there's going to be a cash burn while they wind-down.  We'll have to wait and see details on the transition plan to AC, but once the gross billings start flowing to AC, they will have little in the way of incoming cash flows beyond what they get from their investments.

You add all of that up and it could be up to $3 per share BEFORE the debt and preferreds make-whole payments.

Not saying that there isn't potential upside, but all of the sum-of-the-parts that I've seen on VIC, from Mittleman, etc -- ignore all of these costs/expenses because they assume a quick jump from steady-state A to steady-state B.  I'm worried that it's the transition part in the middle that will bleed quite a bit of cash.  This was not a very cost-conscious culture and had a habit of making expensive commitments and poor capital structure/allocation decisions.  I really worry about the cash expense of dealing with those hidden costs in a liquidation scenario.

wabuffo

Good points, but I think you are being overly punitive. If PLM is worth 9x 2017 EBITDA, then you have a buffer of ~325mm CAD between the implied value of the equity and the current market cap. It is EXTREMELY unlikely that you will burn that much cash in a liquidation. Most of the operating commitments should leave with Aeroplan off Aimia's balance sheets, but I guess we will need to wait for final confirmation for management. I have already included both the accrued preferred and common dividends in my SOTP.

Not to mention, ILS might have positive value if it is sold off.


NewbieD

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Re: AIM.TO - Aimia
« Reply #371 on: January 10, 2019, 06:47:46 AM »
So they repurchased 250m. Looks like your extrapolation from the strategy officer leaving was right, Agul.

What's next then - repurchase offer?

samwise

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Re: AIM.TO - Aimia
« Reply #372 on: January 10, 2019, 05:59:00 PM »
Buyback prefs at a discount from the holder who owns 1/3rd of a illiquid issue?

Aqul

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Re: AIM.TO - Aimia
« Reply #373 on: January 15, 2019, 07:11:40 PM »
Retiring the debt was a great move to avoid leakage through interest payments. I guess they need to decide now whether they want to liquidate or deploy their remaining capital. If the latter, it might make sense to keep the preferred in place. I would much rather take the quick return of a liquidation, though.