LILA - Liberty Global Latin America tracker

[Liberty]

Liberty Global Provides Update on the Impact of Hurricanes in the Caribbean

 

http://www.businesswire.com/news/home/20171006005214/en/Liberty-Global-Update-Impact-Hurricanes-Caribbean

[no_free_lunch]

The malone purchases are interesting.  Beyond that, even at reduce price I have the stock at around 7-7.5 EV/EVITDA, not sure if that is really cheap.  Does anyone have any good comps?

[skanjete]

Does anyone know when the LILA spinoff will materialise?

 

And under what form will they do it, by way of dividend?

 

thank you.

[Liberty]

Does anyone know when the LILA spinoff will materialise?

 

And under what form will they do it, by way of dividend?

 

thank you.

 

Full spin off was scheduled "before end of the year", but might be pushed back because of the situation caused by the hurricanes. We'll know more during the Q3 call, I'm guessing.

 

I'm assuming that the tracking stock will stay the same, it'll just now be asset-backed.

[maybe4less]

Does anyone know when the LILA spinoff will materialise?

 

And under what form will they do it, by way of dividend?

 

thank you.

 

They announced the Lilak CEO today FWIW. Press release still says that it is expected around the end of the year.

 

http://www.libertyglobal.com/pdf/press-release/Liberty-Global-LiLAC-Management-FINAL.pdf

[skanjete]

Does anyone know when the LILA spinoff will materialise?

 

And under what form will they do it, by way of dividend?

 

thank you.

 

Full spin off was scheduled "before end of the year", but might be pushed back because of the situation caused by the hurricanes. We'll know more during the Q3 call, I'm guessing.

 

I'm assuming that the tracking stock will stay the same, it'll just now be asset-backed.

 

Thank you.

 

I was in fact wondering whether that could be a taxable event.

 

I remember the takeover of TWC by Charter has been taxed here. I had to pay 30% tax on my total Charter position because the taxman assumed that old Charter got liquidated which is a taxable event.

 

Likewise, dividends are taxable as well, just as liquidations are taxable, so I wonder whether I should sell my LILA's in advance of the spin-off.

[Munger_Disciple]

I remember the takeover of TWC by Charter has been taxed here. I had to pay 30% tax on my total Charter position because the taxman assumed that old Charter got liquidated which is a taxable event.

 

I don't think the exchange of old CHTR shares for new was a taxable event, so I am not sure what you are trying to say.

 

In general, the words "Malone or Liberty" and "taxes" are mutually exclusive.

[Liberty]

skanjete, where are you located? The rules for these things might be different where you are. Here, the TWC-CHTR-BHN merger didn't trigger anything taxable (in Canada, and same in the US afaik).

[Jurgis]

I remember the takeover of TWC by Charter has been taxed here. I had to pay 30% tax on my total Charter position because the taxman assumed that old Charter got liquidated which is a taxable event.

 

I don't think the exchange of old CHTR shares for new was a taxable event, so I am not sure what you are trying to say.

 

In general, the words "Malone or Liberty" and "taxes" are mutually exclusive.

 

skanjete is in some European country (Sweden?). Unless you are familiar with tax laws of that country, you probably should not give tax advice. ;) From what I have seen different countries tax very different events/things/whatever. Assuming that country X tax laws are same/similar to US/Canadian laws is a recipe for pain.

 

@skanjete: I think your question is tough, since you really need someone who knows your local tax laws and also knows the Liberty spinoff from tracker stock from legal standpoint. I doubt that there's someone who is qualified to give that kind of legal advice here. Though perhaps I am wrong...

[Munger_Disciple]

Unless you are familiar with tax laws of that country, you probably should not give tax advice.

 

What's wrong with you??? You are implying things that are untrue. I am not giving anyone tax advice!

[skanjete]

I know the charter event wasn't taxable in the US.

 

But here (indeed an European country) tax laws are arcane. Moreover, certains taxes are collected through the banks and banks are being held liable by the government if some taxes that are due aren't being collected. So in case of the slightest doubt, the banks will tax. Thereafter you have the right to complain and try to recoup some of your money, but good luck with that...

 

As I said the charter deal has been taxed although shareholders didn't earn a dime in the transaction. Another deal that was taxed was the split of Google in 2014. Shareholders got extra shares by way of dividend which were taxed. Again no economic gain for the shareholder, but a tax for the state. Heck I've even been taxed some buy backs by a company because they considered it to be a dividend!

 

And although I tried, there's no way you can get an opinion from the banks in advance on how they will treat a transaction. This is not a great country for special situation investing!!!

 

 

[Sunrider]

Open an in account - they mostly know what they are doing

[skanjete]

Open an in account - they mostly know what they are doing

 

Do you mean an interactive broker account?

[Sunrider]

Open an in account - they mostly know what they are doing

 

Do you mean an interactive broker account?

yes - autocorrect - IB account, if you're in the EU, the account will be held in the UK (likely) under the current passporting rules. You may get a more intelligent treatment than from your local bank.

[Happy]

In Germany the Charter-TWC takeover didn't trigger taxes. In other situations I received spin-offs and some were treated as a taxable dividend and others weren't. My lawyer also said he can't tell this in advance. The authorities seem to judge this after the fact and sometimes it gets overruled years later (like a Google stock-split that first triggered taxes). So I will probably sell my Global shares before the spin-off, but obviously that's not ideal.

[Spekulatius]

LILA’s numbers are pretty crappy too, so maybe another reason to sell. Negative FCF this year, infrastructure destroyed in Puerto Rico where the outlook was bad to begin with. Legacy Lila operation in Chile do just fine. That merger with C&W destroyed a lot of value for LILa shareholders. I own a few shares, but I am not tempted to add.

[Liberty]

https://www.sec.gov/Archives/edgar/data/1570585/000157058517000374/xslF345X03/wf-form4_151061276770642.xml

[no_free_lunch]

Looking at the most recent quarter numbers it looks like revenue was flat even without puerto rico.  Is this not concerning given how much capex there is?  They are in negative fcf due to the capex so it is hard to justify that if you aren't getting any growth. 

[Liberty]

And Reid's out:

 

http://www.cwc.com/news-and-media/press-releases/cable-wireless-announces-john-reid-ceo-to-step-down.html

[spark411]

There is a theory that Lilak is trading at a tracking stock discount.    Anyone have any thoughts what the premium will be once this transitions from tracking stock to directly traded stock?    If anyone has any links as to what happens in the 1-3 months afterwards a tracking stock becomes a trading stock, would appreciate it.  I'm wondering if the price goes down first because there are owners who want to sell out.  Thanks!

 

 

http://www.libertyglobal.com/pdf/press-release/12-12-LiLAC-Split-Off-Press-Release-FINAL.pdf

[Liberty]

There is a theory that Lilak is trading at a tracking stock discount.    Anyone have any thoughts what the premium will be once this transitions from tracking stock to directly traded stock?    If anyone has any links as to what happens in the 1-3 months afterwards a tracking stock becomes a trading stock, would appreciate it.  I'm wondering if the price goes down first because there are owners who want to sell out.  Thanks!

 

 

http://www.libertyglobal.com/pdf/press-release/12-12-LiLAC-Split-Off-Press-Release-FINAL.pdf

 

I'm not sure... I kind of feel like the fact that they've announced the change for a long time would've led to the market pricing that in (forward-looking..). It's not like it'll happen as a surprise and suddenly it'll gap up. Though I suppose on the other hand, maybe some investors are prevented by their mandate from owning odd instruments like tracking stocks.

 

In short: ¯\_(ツ)_/¯

[Liberty]

https://www.sec.gov/Archives/edgar/data/1570585/000157058517000417/0001570585-17-000417-index.htm

[Gordon Gecko]

https://www.sec.gov/Archives/edgar/data/1570585/000157058517000417/0001570585-17-000417-index.htm

 

Seems positive. Complete waiver of leverage covenants through YE18, w/ smaller than expected equity injection. Only seem to be giving up distributions over the same period, which, face it, weren't really all that likely.

 

Really seems like one of the more interesting ideas out there now. Management/Board alignment is finally on your side and Digicel is going full restructuring mode. If you just look at the negative FCF and the flat rev/margins, I think you miss the highly competitive pricing environment. And there's now better cure to low prices than low prices. LILAK's already showing pricing power in Jamaica, Panama may be going through some structural changes to consolidate the industry, business friendly political group running Chile, Barbados minority buy-in looks very accretive, and now it looks like LPR won't be a big drag on capital deployment. Knock on wood.

[spark411]

 

 

 

Sometimes quantitative factors lead to big opportunities.  I think if one uses common sense qualitative factors, I think it leads to big opportunities.

 

Does LILAK offer the perfect opportunity to go big in a portfolio?

 

1. Have earnings that are low short term and have value reflecting the short-term earnings versus the stabilized run rate. 

        For example, have a hurricane depress earnings for short term.

2. Have in place management that has know how, sources of suppliers, sources of money, and a clear playbook to grow

        that’s been field tested in another region over 20 years.

3. Have insiders buying the stock.

4. Have the parent company change it’s mind from not buying more shares to buying more even at the expense of the

        parent company shares being depressed.

5. Have parent company send top officials to lead the subsidiary.

6. Have a clear catalyst in changing from tracking stock to direct stock.

7. Have shares drop more than 50% from highs from 2 years ago?

8. Have opportunities to grow in services/products offered to existing customer sand have geographies to grow organically

        or via acquisitions for at least 10 years.

9. Have small market cap that has room to grow.

 

I think the answer is yes.  Please comment on reasons why anyone thinks otherwise.

[no_free_lunch]

Points 2-9 are valid but I think it comes down to point 1.  Why do you think that the earnings are temporarily depressed?  I see very stale results even without puerto rico.  The thesis is that these markets have low penetration and lila should therefore be able to increase revenue.  How come organic revenue isn't going gangbusters?