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LICT CORP LICT
February 15, 2015 - 9:52pm EST by
blackstone
2015 2016
Price: 5,000.00 EPS 0 0
Shares Out. (in M): 0 P/E 0 0
Market Cap (in $M): 111 P/FCF 0 0
Net Debt (in $M): 40 EBIT 0 0
TEV (in $M): 151 TEV/EBIT 0 0

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  • Potential Acquisition Target
  • Insider Ownership
  • Potential Buybacks
  • Illiquid
 

Description

 
 
Recent Financials

YTD 2014

Revenues

Regulated: 44.1mm  vs  42.7mm yoy

Non-Regulated: 31.7mm  vs  28.5mm yoy

EBITDA: 28.3 vs  25mm (includes the DFT subsidiary, .9 vs .6 of dividends from equity affiliates, and  2.3 of corporate expense-flat yoy)

 

Comp Analysis

EV/ TTM EBITDA

Alaska Communication:  8.5x

Frontier Communication: 8.5x

General Communication: 6.3x

Windstream Holdings: 6.4x

 

The Verizon/Frontier deal announced on February 5th was transacted at north of 6x from Verizon’s perspective (Frontier netted out some stranded/replaceable costs and the npv of a tax asset to arrive at the reported 3.7x multiple)

 

 What's It Worth

We take the reported operating ebitda ex the DFT subsidiary results and subtract the dividends from equity affiliates because we want to value each piece separately.

6 * 33mm in ebitda=198

Net debt= 39.8

=$7,085/share

+ 1.6mm of equity earnings capitalized at 10x= 16mm or $700/share

 Total value= $7,785 or 55% upside from current trading level

 

 Semi-Recent Catalysts 

1. The following press release was put out in August with the stock trading at $4,000. A 'significant premium' is open to interpretation but we think it likely means more than the 25% gain embedded in the current price. 

RYE, N.Y., Aug. 28, 2014 /PRNewswire/ -- LICT Corporation (OTC Pink®: LICT) ("LICT" or the "Company") announced today that it has received an unsolicited, preliminary and non-binding proposal from an unaffiliated third party to acquire the Company.  As with an earlier unsolicited proposal which LICT disclosed on February 19, 2014, the current proposal represents a significant premium to LICT's recent trading price. In addition, the proposed price is closer to the prevailing financial and marketplace dynamics in LICT's industry than the previous proposal.  However, the proposal is also subject to a number of contingencies.

As we noted in disclosing the February acquisition proposal, LICT's main focus continues to be on growing the value of our businesses.  The Company's Board of Directors will nonetheless carefully analyze and assess any proposals. On that basis, the Board will reach a final determination as to whether the proposed price adequately reflects the private market value of LICT and would deliver full value to our stockholders.     

If the Board concludes that the current proposal is "too tentative", there can be no assurance that any revised proposal would be made or that, if made, a revised proposal would be adequate.  The Company does not undertake any obligation to provide any updates with respect to this or any other potential transaction, except as required under applicable law.

2. In addition, the company recently refinanced their credt facility; something they had long sought to do. Given the company's history in allocating capital, we feel that additional share repurchases can reasonably be expected at current levels.

RYE, N.Y., Dec. 31, 2014 /PRNewswire/ -- LICT Corporation (Pink Sheets®:"LICT") is announcing that its wholly-owned subsidiary, Brighton Communications Corporation, has obtained a $30 million revolving credit facility from CoBank, ACB.  The facility matures onDecember 30, 2017 and replaces LICT's current $25 million facility. The new credit facility will allow for an expanded share repurchase program and other potential shareholder and operational initiatives.   

 

Robert E. Dolan, LICT's Executive Vice President and Chief Financial Officer said, "We are pleased to have reached agreement with CoBank for this new facility and to continue our long association with them. The facility provides us with increased financial flexibility and adequate liquidity for our current corporate purposes. As always, we continue to reevaluate our overall financial structure with an eye toward optimal fit within our strategic direction."

 

Insider Ownership

The management team, led by Mario Gabelli, owns a considerable percentage of the company and has been a trustworthy steward of shareholders’ capital through the years. They have spun out two public entities: CIBL (CIBY) and ICTC Group (ICTG); and have been consistent repurchasers of company stock.

 
 

Summary

LICT is a cheap stock with several impediments to value realization in the public markets (illiquid pink sheet name, high dollar price). This has allowed the management team to reduce the float at quite favorable prices. With the recent announcements about the unsolicited acquisition proposal (and several recent deals that serve as comparable transactions) and the now under-levered balance sheet, we feel like our path towards getting paid either in an outright sale, or some sort of return of capital is clearer than it has been in a long time. 

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise do not hold a material investment in the issuer's securities.

Catalyst

Catalyst

  • The company successfully negotiates with the party mentioned in the August release surrounding the unsolicited acquisition proposal.
  • The management team makes use of the under-levered balance sheet and accelerates the pace of buybacks through executing on the current authorization or through a dutch tender.
  •        Although the company didn’t win any spectrum in the most recent auction, future auctions present some optionality for this management team to benefit shareholders as they have historically.

 

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