BH - Biglari Holdings

[Parsad]

Looks like Fortress was trying to get control. Steak N Shake is suing Fortress.
It says on Bloomberg SNS paid the loan for $102 million to avert bk.

Sanjeev's price he sold at $120 was a great one. Even averting bk it isn't any higher.

Sardar paid a premium to get his own debt from Fortress...smart play by Fortress to acquire the debt...but let's see what the courts say.  I'm not sure BH has a real case here, but if they were in negotiations, Fortress may have received certain privileged information.  I'm sure they'll just come to some sort of settlement over time.  Cheers!

[5xEBITDA]

I'd be very surprised if Pete did something wrong here.

[OracleofCarolina]

it will be interesting to see how Sardar gathered up the $102 million to pay off the debt. Seems like we would have seen a filing if he sold some Cracker Barrel, maybe he did another pre-paid forward variable contract on the stock...maybe he found a financing partner??

[NBL0303]

Looks like Fortress was trying to get control. Steak N Shake is suing Fortress.
It says on Bloomberg SNS paid the loan for $102 million to avert bk.

Sanjeev's price he sold at $120 was a great one. Even averting bk it isn't any higher.

Sardar paid a premium to get his own debt from Fortress...smart play by Fortress to acquire the debt...but let's see what the courts say.  I'm not sure BH has a real case here, but if they were in negotiations, Fortress may have received certain privileged information.  I'm sure they'll just come to some sort of settlement over time.  Cheers!

Well they retired $153 million in debt for $102 million, so it wasn't a premium in that sense. The debt, as of the end of the third quarter, had an implied total market value of $89 million - so I guess you could say that they paid a slight premium to that. But really not very much debt traded that cheaply. In some sense they made an accounting gain of $50 million actually though more because they retired some of this original debt previously at a discount also. But of course the reason they got this "gain" is because of the mess that is Steak n Shake.

[ValueMaven]

or maybe he sold that all black Lambo....

[NBL0303]

it will be interesting to see how Sardar gathered up the $102 million to pay off the debt. Seems like we would have seen a filing if he sold some Cracker Barrel, maybe he did another pre-paid forward variable contract on the stock...maybe he found a financing partner??

After the Cracker Barrel sales a few years ago I think the Lion Fund II had over $100 million in cash sitting in it. They also had a $40 million gain from Tiffany's in the Lion Fund II and Fat Brands loan paid back/etc. So I think they had more than that amount of cash around. Also between 9/30 and 12/31 Lion Fund II sold $40 million or so of Berkshire. So they had a lot of cash, the question is did they use most of it on this debt retirement.

[ValueMaven]

talk about good money chasing after bad.  Couldnt think of a worse situation.  Selling Berkshire to buyback SnS debt...sad

[OracleofCarolina]

http://www.biglariholdings.com/financials/2020/Reports/Biglari%20Holdings%20Annual%20Report%202020.pdf

Friday's close was $585.54 for the A shares and $125.54 for the B shares, I get a market cap around $381 million

What do you get for $381 million?

Steak N Shake with no debt(worth 90 million lets say), Western Sizzlin, 1st Guard, Southern Pioneer, Southern Oil, Maxim, you would think all of those would be worth at least $275 million and then the Lion Fund minus the BH shares is about $419 million minus the taxes if he sold all of Cracker Barrel is about $375 million(this is 12/31 so worth even more now)

I am guessing he used the cash and securities at the corporate level to come up with the 102 million to pay off the debt

So 375 million + 275 million = 650 million, so about a 40% discount for corporate governance ,right??

[NBL0303]

http://www.biglariholdings.com/financials/2020/Reports/Biglari%20Holdings%20Annual%20Report%202020.pdf

Friday's close was $585.54 for the A shares and $125.54 for the B shares, I get a market cap around $381 million

What do you get for $381 million?

Steak N Shake with no debt(worth 90 million lets say), Western Sizzlin, 1st Guard, Southern Pioneer, Southern Oil, Maxim, you would think all of those would be worth at least $275 million and then the Lion Fund minus the BH shares is about $419 million minus the taxes if he sold all of Cracker Barrel is about $375 million(this is 12/31 so worth even more now)

I am guessing he used the cash and securities at the corporate level to come up with the 102 million to pay off the debt

So 375 million + 275 million = 650 million, so about a 40% discount for corporate governance ,right??

Agree with most of your thoughts - except you are using the market cap that includes all of the shares that Biglari Holdings owns in itself in the Lion Funds yet you are excluding the value of those share when you say "The Lion Fund minus the BH shares." There are two approaches to this, in my view, either one makes sense. One is to exclude the "self-owned BH shares" from the market cap and exclude their value from the value of BH/Lion Fund's investments. Or, to include all of those self-owned shares in the market cap and then also include them in the value of BH's investments.

The post above includes those shares in the market cap but excludes their value in the investments. I do not think that is consistent or an accurate view of this. The market cap, if you exclude those BH self-owned shares, is about half of the figure in your post.

[peridotcapital]

So no debt on the balance sheet anymore and guidance that SNS will make money in 2021... perhaps we are moving at a little faster pace to a situation where BH can report relatively consistent profits from operations, show regular earnings on a quarterly basis, and maybe be able to be valued on P/E for the first time.... ever? Given the dramatic discount, I wonder if such a scenario would be a catalyst for the stock over the next couple of years?