have they just taken another loan as per recent news? a small one this time? you mentioned on one of the podcasts that you ve met some C-level guys from Vertex? (not sure if I remember correctly).. what is your feeling here on their current/next steps?
Yeah, it was$15 million, $11 million refi, $4 million new, plus 500k warrants at $1.28 for the lender. Not amazing, just waiting for some major deal to fix capital structure. JV, or sale of legacy asset. Management does not prefer bootstrapping their way out, but they probably could
What does bootstrapping mean in this case? Pay off the loan through organic cash flows?
Also, what does the $11 million refi here mean? I thought they basically had ~$9 million in interest and ~$2 million in principal due for the June payment?
Yes, bootstrapping means through organic cashflows. I'm not sure which $11 million was repaid, but my understanding is this recent debt round only had $4 million net new debt.
Appreciate the response. Are you also including the debt onto it's value/replacement cost? Just wanted to clarify since I assume you think it's probably $2 billion in replacement cost so market value is $1 billion = $10 / share. But if you include $200 million in debt, that's roughly only 4-5x from here which obviously is still a good R/R.
The debt is countered by the legacy motor oil recycling in Louisiana which is probably worth $200 million. Plus the sunk capex for renewable diesel which may or may not be worth something someday. Plus the truck ramp business which they inherit in 2025. $10 a share is a conservative estimate for my exit, as I am not into renewables and won't stick around for that to materialize. But if you are into renewables, VTNR, if it survives, could easily be worth much more in a few years.
have they just taken another loan as per recent news? a small one this time? you mentioned on one of the podcasts that you ve met some C-level guys from Vertex? (not sure if I remember correctly).. what is your feeling here on their current/next steps?
Yeah, it was$15 million, $11 million refi, $4 million new, plus 500k warrants at $1.28 for the lender. Not amazing, just waiting for some major deal to fix capital structure. JV, or sale of legacy asset. Management does not prefer bootstrapping their way out, but they probably could
What does bootstrapping mean in this case? Pay off the loan through organic cash flows?
Also, what does the $11 million refi here mean? I thought they basically had ~$9 million in interest and ~$2 million in principal due for the June payment?
Thanks for your input.
Yes, bootstrapping means through organic cashflows. I'm not sure which $11 million was repaid, but my understanding is this recent debt round only had $4 million net new debt.
Thanks for this post. Just curious how you come up with a valuation of 10x?
Most oil refineries trade for somewhere around 1/3 of revenue, or 1/2 of replacement cost. Either of those give something over $10 per share.
Appreciate the response. Are you also including the debt onto it's value/replacement cost? Just wanted to clarify since I assume you think it's probably $2 billion in replacement cost so market value is $1 billion = $10 / share. But if you include $200 million in debt, that's roughly only 4-5x from here which obviously is still a good R/R.
The debt is countered by the legacy motor oil recycling in Louisiana which is probably worth $200 million. Plus the sunk capex for renewable diesel which may or may not be worth something someday. Plus the truck ramp business which they inherit in 2025. $10 a share is a conservative estimate for my exit, as I am not into renewables and won't stick around for that to materialize. But if you are into renewables, VTNR, if it survives, could easily be worth much more in a few years.