Author Topic: AIM.TO - Aimia  (Read 182617 times)

Dr. Aybolit

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Re: AIM.TO - Aimia
« Reply #690 on: May 28, 2020, 06:36:31 AM »
I think maybe the reason Aimia gave AM such an accommodative deal is because AM needs the cash from PLM much more than Aimia does right now, and so maybe it means a stronger AM averts bankruptcy as a result, in an environment where Avianca and LATAM have already succumbed.  But getting AM to commit to a valuation floor of 7.5x EBITDA and US$400M minimum for Aimia's 49% stake in PLM, is a meaningful get versus the US$180M they (AM) bid for it less than 2 years ago, not to mention the 20 year contract extension (reversing AM's previously threatened stance that they sought to end it as soon as possible).  So Aimia gives a bit more right now to help its key partner during an unprecedented time of industry crisis, but gets rid of much of the uncertainty surrounding the value of PLM. I don't see that as a mockable outcome.  And while it's obvious a leverage recap would be ideal, the debt market probably not ideally receptive to such a deal at this moment.

and of the $29M additional drop in cash due to the Kognitiv transaction, the presentation slide on page 18 of the May 2020 presentation clearly states that $22M of that $29M was "restricted cash" which I imagine was mandated reserves for some deferred revenue that was integral to the operation of the businesses sold to Kognitiv, so that's not really incremental consideration paid given Aimia would likely never get access to use that $22M (unlike the remaining $65M in restricted cash related to Air Canada, which is expected to become unrestricted soon and thus usable by the holdco). So I don't see this as sweeping negatives under the rug, nor do I see the post-annoucement adjustments as unusual; for example they got Air Canada to agree to pay $450M for Aeroplan (up from the initial $250M bid), and that initially announced $450M somehow ended up at $516M by the closing (through various adjustments that could not be calculated at the time of the initial annoucement), so it can work both ways.


wabuffo

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Re: AIM.TO - Aimia
« Reply #691 on: May 28, 2020, 07:50:41 AM »
Thanks for your comments.

I see that LifeMiles debt is back to trading near par.  Frankly, $100m is marginal for Aeromexico given the size of their liabilities.  They could've done the dividend recap if they wanted to do.  In this low rate environment, PLM could've easily floated LIBOR+550 debt (which is basically what Aeromexico is "paying" for their loan advance) - given they have no other debt on their balance sheet.

Despite all the fancy press release language.  Here's the bottom line the way I see it:
 - Aeromexico gets their dividend recap money early, while AIMIA gets to wait 2 years or more (and receives no other cash from PLM in the meantime after the dividend announced as part of the deal).  In return, AIMIA gets an extension to their PLM shareholder agreement.

Personally, I don't think the guarantee price means much since it is at Aeromexico's option and will expire after seven years. IMO, it was thrown in because the Mittlemans wanted it in the press release so they could point to it.  The extension of the agreement to 2050 is worth something though and a good thing.

On the Kognitiv deal, we'll have to wait and see.  It'll be interesting to see future marks from URB.TO after the deal closes.  They own some of the equity in Kognitiv in their portfolio. 

wabuffo




« Last Edit: May 28, 2020, 08:26:39 AM by wabuffo »

Dr. Aybolit

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Re: AIM.TO - Aimia
« Reply #692 on: May 28, 2020, 09:33:53 AM »
if they could easily do the leveraged recap now, as you claim, why then assume that Aimia "gets to wait 2 years or more" for it?

couldn't it happen before year-end?

i think the minimum valuation is very comforting to me and most investors who only months prior had been worried about litigation given the aggressive noises that were emanating from AM then, but you think it's puffery, i'm not surprised given the relentlessly negative slant of your prior posts, which i find odd for someone who claims to be long the stock.   i think it's substantial progress.

wabuffo

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Re: AIM.TO - Aimia
« Reply #693 on: May 28, 2020, 10:54:55 AM »
if they could easily do the leveraged recap now, as you claim, why then assume that Aimia "gets to wait 2 years or more" for it?

I honestly don't know why - Aeromexico's $100m receivable to PLM could be "paid back" and PLM could take on $200m in debt and issue a $100m dividend to AIMIA.   They would still have $160m in cash ($170 - 110m(Aeromex +divie) + $200m new debt - $100m to AIMIA) and $200m in debt.  Someone should ask the question. Why is AIMIA waiting around for their dividend?  Its a bad look for Mittleman.   If Aeromex and PLM recover then they could do a second tranche of $200m.

LifeMiles took on $500m in debt and has similar levels of revenue as PLM (though they appear to be more profitable than PLM).   

wabuffo
« Last Edit: May 28, 2020, 11:53:49 AM by wabuffo »

Dr. Aybolit

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Re: AIM.TO - Aimia
« Reply #694 on: May 28, 2020, 11:48:32 AM »
what's more important for Aimia, adding to their cash pile right now, or getting the best interest rate possible on the term loan PLM will issue to fund a leveraged recap?  what's the rush?

wabuffo

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Re: AIM.TO - Aimia
« Reply #695 on: May 28, 2020, 05:11:59 PM »
Uhhh - maybe when they issue the all-clear a few years from now, equities will go back to being waayyyyy overvalued?  There’s probably a reason smart investing shops are opening up right now to new investors (after being previously closed to new money).

But what do I know...

wabuffo
« Last Edit: May 28, 2020, 06:20:42 PM by wabuffo »

Cigarbutt

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Re: AIM.TO - Aimia
« Reply #696 on: May 28, 2020, 06:08:35 PM »
News is out that Air Canada is trying to block the Kognitiv merger.
Why would they want or need to do that?
Couldn't this have been prevented pre-announcement or is this business as usual?
Maybe Aimia could temporarily lend money to Air Canada in exchange for dropping the case?   ::)

Dr. Aybolit

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Re: AIM.TO - Aimia
« Reply #697 on: May 28, 2020, 06:52:33 PM »
my point about not needing to rush is that Aimia still has C$190M (C$118M unrestricted) in cash remaining, so they could do a C$300M to C$400M LBO with that, or maybe buy a foothold in a public stock for C$50M to C$100M, if they had a compelling opportunity tee'd up, like the C$75M they just invested in Clear Media (100 HK). 

re: Air Canada suit, I have no idea.  I don't see how or where Kognitiv would or could compete with Aeroplan. 

wabuffo

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« Last Edit: June 08, 2020, 05:54:55 AM by wabuffo »

Homestead31

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Re: AIM.TO - Aimia
« Reply #699 on: June 09, 2020, 05:14:53 AM »

News Releases
Aimia Announces Sale of Recently Purchased Public Market Securities
TORONTO, June 9, 2020 /CNW Telbec/ - Aimia Inc. (TSX: AIM) announces that it has successfully completed the sale of its entire diversified portfolio of publicly-traded equity securities, resulting in a substantial gain for stakeholders.



Hard to argue with a management team and board who have the ability to be opportunistic like this.  Not huge dollars or anything, but i think it speaks to having skin in the game and not having a culture based on thumb sucking like so many companies out there.