brewer12345
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Mar 6, 2003
- Messages
- 18,085
After some digging and head-scratching, I have started to buy a bit of this thing and would be interested in any and all thoughts.
Chemtura is a specialty chemical maker which recently exited bankruptcy. The company was the reult of a highly leveraged combination of two chemical companies (Great Lakes Chemical and another whose name escapes me). The company subsequently blew up during the recession because its balance sheet was so over-leveraged that it could not withstand a rough patch.
What has emerged is a specialty chemical company with a collection of businesses that are either in specialized niches or a top 3 player in their markets. Half of sales are outside of the US. In the last 12 months to September the company generated $322MM in EBITDA. The post bankruptcy capital structure is about $750MM in debt and a smallish bit of contingent liabilities (pension, etc.).
This business has been starved for capital for years, so I would be quite surprised if management did not move quickly to put cashflow to work in projects with very high rates of return. As such, I would expect to see EBITDA growth even with no help from the economy. Of course if the economy does help out, the business will get a big tailwind.
So this looks like a beaten down cyclical trading at a bit more than 6X EV/EBITDA with a rationalized capital structure and an incentivized management team, hopefully heading into a modest economic recovery.
Thoughts? Gotchas?
Chemtura is a specialty chemical maker which recently exited bankruptcy. The company was the reult of a highly leveraged combination of two chemical companies (Great Lakes Chemical and another whose name escapes me). The company subsequently blew up during the recession because its balance sheet was so over-leveraged that it could not withstand a rough patch.
What has emerged is a specialty chemical company with a collection of businesses that are either in specialized niches or a top 3 player in their markets. Half of sales are outside of the US. In the last 12 months to September the company generated $322MM in EBITDA. The post bankruptcy capital structure is about $750MM in debt and a smallish bit of contingent liabilities (pension, etc.).
This business has been starved for capital for years, so I would be quite surprised if management did not move quickly to put cashflow to work in projects with very high rates of return. As such, I would expect to see EBITDA growth even with no help from the economy. Of course if the economy does help out, the business will get a big tailwind.
So this looks like a beaten down cyclical trading at a bit more than 6X EV/EBITDA with a rationalized capital structure and an incentivized management team, hopefully heading into a modest economic recovery.
Thoughts? Gotchas?