cemadh Posted January 23, 2013 Share Posted January 23, 2013 Anyone on this board following Tecumseh Products Company? Founded in 1930 - makes hermetically sealed compressors. Back of the envelope - Tangible BV is $280MM++ Current market cap after the huge run up is $145MM Sales - stagnating to marginally improving. Roumell Asset Management has a 20%+ stake and has been pushing the company to shed some assets and discontinue segments that are losing money to low priced competition. Chairman Kent Herrick (member of the founding family) resigned over the weekend. Apparently he was digging his heels in and refusing to let this happen. This morning the company announced that they were open to selling all or part of the company. I am long and I would love to hear the thought of others on this board. I have TECUA. TECUA and TECUB have different voting rights and TECUA is more traded Link to comment Share on other sites More sharing options...
Hielko Posted January 23, 2013 Share Posted January 23, 2013 Haven't followed the company, but remember that it has been written up a few times on VIC. Link to comment Share on other sites More sharing options...
cemadh Posted January 24, 2013 Author Share Posted January 24, 2013 "land and land improvements" is being held in the balance sheet at $13.8MM as of the latest 10-K This is ALL land - India, France, Brazil, US, other countries!! So that is a significant off-balance sheet tangible asset that is "hidden". India operations were acquired in 1997. 55 acres in Hyderabad is worth a LOT more today. Roumell guys have done their homework. Questions - who will buy? what are the political forces that could block a sale? Do they want to sell? How much has changed after the Chairman's resignation? Same issues for Brazil Link to comment Share on other sites More sharing options...
SouthernYankee Posted January 25, 2013 Share Posted January 25, 2013 Several years ago, Walter Schloss had mentioned this company, along with several others (DOW, BSET). I coat-tailed after watching and reading for about 6 months. It looks like some of the circumstances have changed since then, but he had felt there was hidden value. Link to comment Share on other sites More sharing options...
eclecticvalue Posted January 25, 2013 Share Posted January 25, 2013 "land and land improvements" is being held in the balance sheet at $13.8MM as of the latest 10-K This is ALL land - India, France, Brazil, US, other countries!! So that is a significant off-balance sheet tangible asset that is "hidden". India operations were acquired in 1997. 55 acres in Hyderabad is worth a LOT more today. Roumell guys have done their homework. Questions - who will buy? what are the political forces that could block a sale? Do they want to sell? How much has changed after the Chairman's resignation? Same issues for Brazil If they sell the land in the foreign countries. They have to bring the money over to the United States which would be taxed. It would take longer than usual if they went that route. Also it isn't taking into account the taxes they have to pay in those foreign countries. Link to comment Share on other sites More sharing options...
cemadh Posted January 26, 2013 Author Share Posted January 26, 2013 eclecticvalue - Per the latest 10-K, Tecumseh has $393MM of tax loss carry-forwards on their balance sheet. I am no expert on NOL's but I would assume that some or all of the profits from the asset sales in India and Brazil can be offset by these NOLs. According to Roumell, the NOLs are worth about $4 per share and they say that the NOLs would be worth less if the company is sold outright. I do not know how the MFC Industrial and Leucadia guys are able to harvest NOLs of companies they acquire. Roumell believes that Tecumseh needs to exit the household R&F business where profitability is being driven down by Asian imports and maintain their profitable commercial refrigeration business which is protected from low cost imports due to more customization and heavier shipping weights. The commercial side accounts for ~60% of sales. There is a Seeking Alpha article that supports Roumell's assertions. Apparently, if these asset monetizations occur, the company could pay $8 as dividends and still be worth about $5 per share. Link to comment Share on other sites More sharing options...
eclecticvalue Posted January 26, 2013 Share Posted January 26, 2013 Ah, Good to know. I would still be watchful of that situation and how the accounting will be done. One could look at the stock as a holding which would be uncorrelated to the market assuming if they continue with selling the assets. Link to comment Share on other sites More sharing options...
cemadh Posted February 7, 2013 Author Share Posted February 7, 2013 Flickhopper- in my opinion, Kent's resignation and the subsequent press release about strategic alternatives being pursued is HUGE!! Kent is the great grandson of the founder. Naturally, the founding family does not want their "baby" to be sold. But the company is losing to international competition and other factors. Sell poorly performing divisions or sell the company. No other option now And they can do this in "public" and not in secret anymore because they have announced that they plan to do so Dramatically increases the odds of a sale, especially in this low interest environment Link to comment Share on other sites More sharing options...
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