DHX.DB - DHX MEDIA LTD. 5.875% Debentures

[bizaro86]

I own these independently of the bid. I think they're money good because of the asset coverage here. The assets may not be tangible, but their collection of IP absolutely covers the debt, imo.

[5xEBITDA]

How did you value the IP?

[bizaro86]

Back of the envelope I think the 51% of their peanuts stake is worth more than the $236 MM they got for 49% of the stake. Plus you have to add everything else they own. I think even in a distressed situation someone would take them out for more than the value of the debt as part of an IP land grab.  Their huge back catalogue should have value to one of the media cos trying to build a streamer.

I don't have an exact figure for the IP, more of a "don't need to know a man's weight to see he's fat" type situation. Could be wrong, of course.

[Philbert77]

So these debentures have languished. Any holders out there?

[bizaro86]

I still have a little piece of these. On the one hand, net debt to EBITDA is over 5, so this isn't exactly an investment grade credit and the high YTM is justified. Offsetting that, they are getting real traction on the production side, with the Peanuts deal for Apple, and deals with Netflix, DreamWorks, and Mattel all going. I think the value of their owned brands, library content, and production capabilities probably has a private market value greater than the debt. But I'm no closer to an exact value on those than I was before.

I just have a small position, but if they announced they were selling or winding down their AVOD business I would buy lots. They raised more debt this summer to invest more in their youtube business, and I don't see them ever having the scale to have any market power there. I'd rather they sell content to streaming competitors rather than try to compete themselves.

Edit: this is called wildbrain now, for anyone casually looking into it.