Quick Value #254 - Microcap Spin at 3x EBITDA

A misunderstood asset sitting within a larger and higher multiple business

Today’s idea:

This is an upcoming spin-off where RemainCo has negative implied value.

What’s the catch?

• RemainCo is definitely an “ick” investment in an “ick” industry

• It’s complex (prospectus is just shy of 1,000 pages)

• It’s under the radar (no flashy capital markets day)

But at the same time this is one of the more interesting spins I’ve seen in a while…

• Simple thesis — RemainCo was used as a revenue and cash stream for SpinCo

• Large spin ratio — tiny stub position could lead to heavy selling

• Small/microcap — post-split market cap likely $100-400m