According to appraisal specialist, Alasko, the collection of artifacts from Premier Exhibitions Inc.'s (NASDAQ: PRXI) unit RMS Titanic is now valued at $218 million. The recent appraisal does not include the value of intellectual property and archeological assets compiled during the company's 2010 dive, which includes the first comprehensive map of the wreck site and other 3D imagery. The collection of more than 5,000 artifacts was valued at $189 million in 2007.
In addition to the Titanic exhibits, the company's assets include: Bodies, Tutankhamen, The Golden King and the Great Pharaoh, Extreme Dinosaurs and Real Pirates.
The company has been trying to sell the Titanic artifacts on a piecemeal basis, but the expected price for these artifacts has not been met. If you look at the market cap of almost $40 million, the value of these assets alone would be more than 5 times its market cap. However, it looks like the company needs to dispose these assets before a strong boost to the market price will happen.
One of the obstacles to the company's growth has been its lack of available cash to pursue growth opportunities. As of the recent quarterly report, it has cash of around $4 million with minimal debt. If it could immediately sell these assets, this would provide a boost to its war chest to pursue acquisitions or value-added expansions.
Recently, the company has tapped into an $8 million short-term credit facility with an interest of 12 percent and maturity in 2015. The credit facility is secured by corporate assets and non-dilutive to shareholders.
Samuel Weiser, Executive Chairman of PRXI, said that the credit facility will give the company necessary funds to secure new content for its presentation. Further, the funds also provide the company with time to refocus on how they will monetize the Titanic assets. He also added that the company would pursue sources for longer-term facility to give it necessary funds to execute its capital. Over the past four years, the company has been posting relatively flat earnings.
Analysts are expecting that PRXI will be able to post 15 percent growth over the next five years. However, this is dependent on the company getting more funding in order to pursue its growth plans and re-establish profitability.
Pure Asset Play
Investors buying shares of PRXI are betting on the company to unlock the value of the Titanic artifacts. Entertainment stocks are getting good valuations in the market. In fact, International Speedway Corp. (NASDAQ: ISCA)is valued at 24 times earnings with a market cap of $1.42 billion. On the other hand, The Madison Square Garden Company (NASDAQ: MSG) trades at 44 times earnings and carries a market cap of $4.89 billion.
It will probably take a few more years to unlock the Titanic assets. Patient investors could make a ton of money if the asset sale can be realized. As of now, the stock seems like dead money for enterprising investors.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.