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- Ram Power cannot satisfy certain minimum electricity production conditions imposed on their debts. As a result the company is in default but will probably get a waiver.
- Based on discounted cash flows the shares are worth much more than their current market value.
- The estimate for the future cash flows from operations is simply equal to the cash flow from operations the company realized last year.
- The hidden value could be unlocked soon: the company is looking for a buyer.
Ram Power Defaults & Sale Unlikely, Value Trap Continues Until At Least 2016
- After unsuccessful remediation efforts, Ram Power defaulted on their Phase II Credit Facility.
- Ram is considering a sale of the company, though some fear bankruptcy or low valuations.
- Ram still has options beyond a sale, though they will not be realized until at least 2016.
Ram Power - Problems Likely To End With Sale Of Jacinto Project
- Ram Power share price has dropped 50% due to lower than expected electricity production levels and dilution of shareholders to cover interest payments.
- Currently company is selling its main and only operating asset, geothermal power plant in Nicaragua, and has already received interest from a number of potential buyers. Sale expected during 2014.
- Sale is likely to result in cash windfall at a holding company, which should be sufficient to fully repay existing debt even with conservative estimates.
- Due to leveraged structure upside for shareholders is very sensitive to takeout EBITDA multiple, and could potentially result in a multi-bagger.
Dollar Bills On Sale For 15 Cents: Ram Power Corp.
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