|Shares Out. (in M):||56||P/E||0.0x||0.0x|
|Market Cap (in $M):||200||P/FCF||0.0x||0.0x|
|Net Debt (in $M):||0||EBIT||0||0|
Note: this is fairly illiquid, so mostly a PA idea as cash alternative.
Maxim Power Corp is a liquidation play that should play out over the next 12-18 months and offer 25-40% upside with very low probability of capital loss. Stock trades at $3.85 vs. book value of $4.90, and recent transactions to sell assets in pieces reveal that market value is likely higher than book value. Despite the run, I still like the risk/reward, especially since this name should have no correlation with the market.
|Non-core Assets||Per share||BVPS|
|Current cash (June 30) + Vancouver Landfill sale||$27|
|US assets $90mm, gross 112m, around 6.2-7x $16-18m '13 EBITDA||$90||$1.61||$1.47|
|French Asset (net after debt repayment of $20.7m),6x sustainable EBITDA||$50||$0.89||$0.90|
|Canada (Millner) at 3x cashflow||$106||$1.89||$2.29|
|Total Debt (including environmental reserve, minus US debt)||$19|
Aside from the deals falling through due to financing issues (primarily on the French asset), the biggest risk is that the company uses the proceeds on the Deerfield project ($225m capex budget by mgmt estimate). However, I think that risk is quite low. Insiders (Chairman and a couple of funds) own over 60%+ of shares and have repeatedly said the company will not be public for long. Below is a brief profile of the Chairman, a proven money maker and willing seller in the past. http://www.theglobeandmail.com/report-on-business/careers/careers-leadership/bruce-chernoff-the-comeback-kid-of-the-oil-patch/article8979580/?page=all
CEO does not own many shares and on recent conf calls sounded like he is ready to move on. In addition, Broadview Capital, a very good Canadian small-cap hedge fund, listed Maxim as their top position and had the following blurb in their September shareholder letter:
Furthermore, we recently flew to Calgary (blissfully without children) to get an update from company management. Our intention was to confirm that the company was in wind-down mode and that recent successes (lost in all the M&A was an absolute gangbuster Q2 report) hadn’t convinced management to “make a go of it” as a public company. We were very happy to hear, once again, that the CEO and CFO (and perhaps most importantly, the Board of Directors) are fully of the realization that the sun has set on Maxim as a public company. All efforts are being made to bring this venture to a relatively quick and profitable conclusion.
In terms of event path/timing, my guess would be that we get a special dividend around $2 once the US/French sales finalizes (a topic that came up on the last call and CEO promised to give more clarity on Q3 call), and the remaining Alberta power plant is sold by end of next year.