hibu – a prediction

Gonna stick my neck out here with a prediction for hibu. Debtors have recently waived their covenant test for end Sep, and delayed it to end of Nov. it seems highly unlikely that hibu will be able to raise fresh equity (who’d be insane enough to buy it?), so maybe a D4E is being explored. I can’t imagine that hibu has much in the way of a liquidation value.

Given net debt of 2.2b against a market cap of 12m, current equity holders will be effectively wiped out. EV/EBITDA is currently 13.5, and the company reported in a recent trading statement that EBITDA is deteriorating. So hibu is way over-valued on an enterprise value basis.

If my calculations are correct (and I suspect many people will dispute that, perhaps even successfully), then current equity holders are likely to be effectively annihilated, and debtors are going to take a big haircut. We shall see.


Edit: actually I might be wrong. Maybe someone will offer to buy up the debt at knockdown levels. Just shooting from the hip, here.

Further edit: I missed out on the bombshell contained in 19-Sep-2012: “While no decision has yet been made, certain options may result in a dilution of shareholders’ interests including some options which may attribute little or no value to the Group’s ordinary shares”.


About mcturra2000

Computer programmer living in Scotland.
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