The termination agreement of the asset management agreement, in my opinion, serves as a very valuable protection to the downside on the value of this business. That being said, given the related party transactions here, is there anything that would prevent CP to amend the agreement to eliminate and/or severely restrict the financial consequences of a termination? There's no specific language that I can come across that speaks to the inability for CP to amend the AMA in their favor.
Very good write up. I have researched this company in detail but I only find the biggest issue with it is the lack of clarity on growth in the future. That said, it's a very very asset light model and 70% of the revenue streams are CPI or Pass through expenses which makes it inflation proof. I think if management does not get anything going the next 3-5 years then they may either sell the company or payout earnings in Dividends. Float is very little so it's a lot of insider Skin in the game.
Thanks for the comment, and the additional points about inflation-proof revenue streams and possibility Schar/Clemente take it private! Their total ownership % at level now they can graudally buy back float, keep the NOLs for themselves without running into section 382 limitation issues.
Great writeup.
The termination agreement of the asset management agreement, in my opinion, serves as a very valuable protection to the downside on the value of this business. That being said, given the related party transactions here, is there anything that would prevent CP to amend the agreement to eliminate and/or severely restrict the financial consequences of a termination? There's no specific language that I can come across that speaks to the inability for CP to amend the AMA in their favor.
Thanks for the comment AC Jones, and the additional details regarding the terms of the asset management agreement.
Very good write up. I have researched this company in detail but I only find the biggest issue with it is the lack of clarity on growth in the future. That said, it's a very very asset light model and 70% of the revenue streams are CPI or Pass through expenses which makes it inflation proof. I think if management does not get anything going the next 3-5 years then they may either sell the company or payout earnings in Dividends. Float is very little so it's a lot of insider Skin in the game.
Thanks for the comment, and the additional points about inflation-proof revenue streams and possibility Schar/Clemente take it private! Their total ownership % at level now they can graudally buy back float, keep the NOLs for themselves without running into section 382 limitation issues.