Author Topic: LILA - Liberty Global Latin America tracker  (Read 98891 times)

ni-co

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Re: LILA - Liberty Global Latin America tracker
« Reply #130 on: November 18, 2015, 02:57:09 PM »
Quote
The deal is not completely paid for with LiLAC shares and LBTYA doesn't trade at 7x.

I realize that but still it appears hugely dilutive to current LiLAC shareholders. See my previous post. They are giving up nearly $174M of EBITDA.

I think I generally agree with you. From the beginning, diluting existing LiLAC shareholders was kind of the point of Malone's sale to LiLAC. That's also why they made the offer so complicated. Malone wants to have a bigger part of LiLAC. I saw this coming and swapped my LILA for CWC (and I also posted it here). Now, he tries to make me take this "Recommended Offer" but I won't do it.

However, I tend to disagree with the notion that, in an alternative universe, this offer would have been a cash offer with the same price tag. It just wouldn't have happened because Malone always looks at his after-tax returns.

In the long run, this deal should be accretive anyway. And, as mentioned, I don't think they are completely candid with regard to how useful the tax losses are. If you don't agree, you are free to vote against it at the shareholder meeting. Malone's votes will be suspended.


Munger_Disciple

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Re: LILA - Liberty Global Latin America tracker
« Reply #131 on: November 18, 2015, 03:28:30 PM »
Actually, the deal is better than I originally thought for current LiLAC shareholders. It is true that existing LiLAC shareholders' share of combined EBITDA post merger is lower, but so is their share of debt. After the deal, their share of debt comes to $1.3B, lower than the current $2.1B debt. As a result, today's LiLAC share price implies a post merger EV/EBITDA of 8.3 for the New LiLAC Group. 

moatsandvalue

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Re: LILA - Liberty Global Latin America tracker
« Reply #132 on: November 18, 2015, 04:29:34 PM »
LiLAC shareholders had a business valued at no more tan ev/ebitda 8 (Chile & PR). With cwc operation, they change and will own a business valued at 9,5x ebitda.

Calculation:
TTM proportionate ebitda cwc: $668
synergies cwc-colombus: $100
Net debt cwc: $3125
TTM ebitda LiLAC ex minority interest PR: $490 - (186.5 * 40%) = 415.4
Net debt LiLAC: $2150
Ownership LiLAC actual shareholders: 25.44%

mkt value 25.44% = $1600
ev/ebitda x9.5
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Munger_Disciple

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Re: LILA - Liberty Global Latin America tracker
« Reply #133 on: November 18, 2015, 04:56:20 PM »
According to the press release announcing the deal, the New LiLAC group will have an EBITDA of $1.4B which is about $140M higher than your numbers. Also you deducted the minority interest in PR but you did not consider the debt attributed to minority interest.

Fat Pitch

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Re: LILA - Liberty Global Latin America tracker
« Reply #134 on: November 18, 2015, 08:49:23 PM »
Quote
The deal is not completely paid for with LiLAC shares and LBTYA doesn't trade at 7x.

I realize that but still it appears hugely dilutive to current LiLAC shareholders. See my previous post. They are giving up nearly $174M of EBITDA.

I think I generally agree with you. From the beginning, diluting existing LiLAC shareholders was kind of the point of Malone's sale to LiLAC. That's also why they made the offer so complicated. Malone wants to have a bigger part of LiLAC. I saw this coming and swapped my LILA for CWC (and I also posted it here). Now, he tries to make me take this "Recommended Offer" but I won't do it.

However, I tend to disagree with the notion that, in an alternative universe, this offer would have been a cash offer with the same price tag. It just wouldn't have happened because Malone always looks at his after-tax returns.

In the long run, this deal should be accretive anyway. And, as mentioned, I don't think they are completely candid with regard to how useful the tax losses are. If you don't agree, you are free to vote against it at the shareholder meeting. Malone's votes will be suspended.

Ya I also avoided some of the dilution by moving to CWC. Now that Malone is going to have a sizable stake I don't think he'll dilute himself going forward. LILAC shareholders traded 2 stranded cable assets for a larger asset that will create scale and get this cash flow machine going. Other cable assets such as Digicel are now screwed since their cost of debt is 11%+ and no access to equity markets. With 1.4b in EBITDA and prob ~700mm+ FCF/yr we should start seeing some consolidation occurring.
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giofranchi

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Re: LILA - Liberty Global Latin America tracker
« Reply #135 on: November 19, 2015, 12:15:48 AM »
Now that Malone is going to have a sizable stake I don't think he'll dilute himself going forward.

+1

With 1.4b in EBITDA and prob ~700mm+ FCF/yr we should start seeing some consolidation occurring.

+1

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moatsandvalue

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Re: LILA - Liberty Global Latin America tracker
« Reply #136 on: November 19, 2015, 12:18:08 AM »
According to the press release announcing the deal, the New LiLAC group will have an EBITDA of $1.4B which is about $140M higher than your numbers. Also you deducted the minority interest in PR but you did not consider the debt attributed to minority interest.

Take cwc proportionate ebitda. There are some minority interests as well there. You are right in the debt (-376,8), but even after taking into account this, it's a multiple higher than 9x ebitda.
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folivera13

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Re: LILA - Liberty Global Latin America tracker
« Reply #137 on: November 19, 2015, 03:59:42 AM »
LTM multiple is high but key is forward multiple including any synergies Liberty can extract. Once growth and extra synergies are taken into account valuation looks cheap. Add on accretive M&A and it can be a home run. Key is meeting growth expectations. If they grow EBITDA at 5% versus 10-11%, the tracker will take a big hit.

Munger_Disciple

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Re: LILA - Liberty Global Latin America tracker
« Reply #138 on: November 19, 2015, 02:35:01 PM »
moatsandvalue,

You are right about the proportionate CWC numbers. I think we will get the pro-forma financials in the near future and allocation of debt and EBITDA among the three entities will be clearer then. 

Jurgis

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Re: LILA - Liberty Global Latin America tracker
« Reply #139 on: November 30, 2015, 12:50:15 PM »
LILAK vs LILA reverse spread is 5%. This is rather nuts. Unfortunately I swapped to LILA some time ago.
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