Share Name Share Symbol Market Type Share ISIN Share Description
Constellation Healthcare Technologies LSE:CHT London Ordinary Share USU210051004 CMN SHS USD0.0001 (DI/REG S)
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 216.00p 0.00p 0.00p - - - 0 06:30:09
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Health Care Equipment & Services 52.1 7.7 7.5 27.4 197.33

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Date Time Title Posts
18/1/201813:39Constellation Healthcare Technologies917
03/3/201021:24Company Health Group220
03/3/201008:53****** CHARTS ******10
08/10/200718:47Company Health Group - The New Name In Town.188
26/8/200611:03Company Health with Charts & News1

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stuffee: Hrundi I do not think we can assume the PIKs will be repaid if there is any future listing. They could be issued by CHT Holdco, which is acquiring Constellation. Constellation could be listed or injected into any quoted vehicle leaving the PIKs in Holdco to wither. Based on the current share price, the market also considers these PIKs to be virtually worthless. With a discount rate of just 5% and most holders based in the UK, I fear there won't be much we can do if Palmar decides to ignore them when maturity comes round in 7 years.
stuffee: I agree valuable comment in today's Sunday Tel on attempted MBO by Paul Palmar. I have always been concerned the PIKs will yield zero value until all the massive new debt has been repaid and even then how can we be sure Palmar will ever repay them, when no interest is actually payable? The S Tel estimates the PIKs are "virtually worthless" and "On every level, this looks a bad deal; the offer should either be increased, or shareholders should reject it and make Mr Palmar pay the costs." They refer to FinnCap's recent target share price of 310p "with further upside". I do feel if we all play hardball, Palmar could be forced to pay a fair price. Why should we give Constellation to Palmar at a £70m discount to FinnCap's value and give him and his backers this profit or possibly a multiple of this in a few years? I will certainly reject it but have not yet received voting form. GargleBlaster, have you received yours? Palmar needs 89% voting in favour to complete. Hrundi, I feel if many private investors oppose, we might succeed in stopping this, but I so agree with you that it would be great if anyone contacts major shareholders such as Legal & Gen, Hargreaves Hale, Richard Griffiths etc. Maybe worth covering other bulletin boards too.
dave2608: Constellation are going to do £42 million profit. Current market cap even after the share price rise is £197 million. This offer is an absolute p*ss take.
mr_benn: Investors Chronicle verdict:It's fair to say that corporate activity has been a major feature of my watchlist of small-cap shares in the past few years. It shows no signs of waning, eitherAim-traded shares in Constellation Healthcare Technologies (CHT:222p), a provider of outsourced medical billing services to US physicians, soared on Friday last week after the company announced a merger agreement with a vehicle backed by its chief executive Paul Parmar and CC Capital, a privately-owned investment company. The offer consists of a cash payment of 293¢, equivalent to 235.5p at current exchange rates, and a promissory note worth 43¢, or 34.5p a share, which combined values the fully diluted equity of the company at $308m (£248m), representing a 45 per cent premium to Constellation's previous closing share price.Analyst Guy Hewett at house broker finnCap has suspended coverage after the announcement, but was previously forecasting a $10.2m increase in cash profit to $52.6m based on a $17.7m rise in revenue to $150.3m in 2017, reflecting the upside of acquisitions made in the past 12 months. On this basis, the exit multiple represents just under six times cash profit forecasts to enterprise value, and around 13 times adjusted EPS of 26.9¢ (21.6p).Shares in Constellation initially surged pass the 250p target price I outlined when I initiated coverage at 178p last month ('Constellation's brightening prospects', 10 Oct 2016), but have since drifted back to a bid-offer spread of 215p to 222p. There are several reasons for this.Firstly, the Parmar controlled entities holding 53.5 per cent of the shares will effectively take a 49.3 per cent economic interest in the new bid vehicle, and that's after banking profit on 38 per cent of its shareholding in Constellation, so the chief executive is keeping virtually all his skin in the game. That's not the case for minority shareholders whose only interest in the new bid vehicle will be the payment-in-kind (PIK) promissory note, the terms of which are hardly overly generous: it's unsecured and unlisted; accrues interest at a paltry rate of 5 per cent a year and repayable on or prior to the seventh anniversary of their issuance; and is denominated in US dollars, leaving UK holders exposed to currency risk.Secondly, if the merger agreement is terminated then under certain circumstances, which in my view are not onerous, Constellation will be liable to pay CC Capital's expenses of up to $4m, and potentially is in hock for a further $10m in the event that fewer than 89 per cent of Constellation shareholders vote in favour of the merger agreement. Moreover, if a higher offer is received from a rival bidder, then Constellation will have to pay CC Capital $8m plus expenses. There is a chance that enough minority shareholders may decide not to accept the offer and that could cost the company millions.Thirdly, the 293¢ a share cash consideration being offered to buy out the issued share capital of Constellation's minority shareholders, who control 46.5 per cent of the shares, will cost the bid vehicle $115.6m, effectively all of which is being funded by a new Bank of America Merrill Lynch credit facility arranged by the bidder. Constellation has an ungeared balance sheet, and could just as easily return cash to shareholders by gearing it up rather than ceding control to another party. Moreover, the promissory note is funding a chunky 13 per cent of the total consideration being offered, so to place a value of 34.5p a share on this unlisted paper is unrealistic in my view given the yield being offered and the terms of issue.Fourthly, although the 270p a share offer at current exchange rates is above my target price of 250p and is 51 per cent higher than the level at which I initiated coverage last month, it only represents a small bid premium above my fair value price when you value the PIK note using a more reasonable interest rate of 10 per cent. On this basis, I value the net present value of the note at only 25p in its current form and not 34.5p. Put simply, the cash consideration needs to be much higher than 235.5p a share, and the interest rate on the promissory substantially higher than 5 per cent for the offer to be worth backing. And that's why the shares are trading below the level of the 235.5p cash element of the offer as investors are clearly disinterested in holding an unsecured low-yielding PIK promissory note in a privately-owned Delaware bid vehicle.Of course, shareholders are being given the opportunity to vote on the merger agreement at the forthcoming general meeting and it will only proceed if sanctioned by those controlling at least 89 per cent of the share capital; by a majority of the minority shareholders; and by a majority of the aggregate voting power. Frankly, there is no way I can possibly suggest voting in favour of the merger arrangement in its current form and I will only change that view if it is sweetened to include a higher cash consideration, and a considerably higher interest rate on the unsecured and unlisted PIK notes. This would act as a major incentive for the bid vehicle to redeem the PIK notes as soon as possible, and realign the interests of minority shareholders with those of the bid vehicle, including Constellation's chief executive Paul Parmar. Reject the offer.
stuffee: Battlebus, I feel if Parmar wants this gem, he must pay a fair price and don't feel it a waste of time to oppose. Parmar needs a "majority of the minority" to succeed. Legal & General own 5% and interesting that the bid announcement was silent on their intent. If Legals and a few others oppose, Parmar should be forced to pay a proper price with proper currency rather than massively overvalued Micky Mouse PIK prom notes. Interesting that finnCap, who are recommending us mug punters to accept so called 270p, recently valued CHT at 310p. Extract from comment on their recent research: "finnCap’s punchy price target The broker reckons the stock is worth 310p more than double the closing share price. It points out the business is trading on a forward multiple of less than 10 times earnings 8%-plus free cash flow." Traditionally bid prices are considered fair if priced at a premium to independent value. Regrettably there have been too many examples in recent years of management, who can properly review prospects, buying out minorities on the cheap and then realising excessive gains later. After all their efforts and costs, I doubt Parmar and pals are going to walk away if this bid is rejected. I am not too concerned by their threats of demanding termination payments from CHT to cover some of their costs bearing in mind they own over 53% of CHT themselves. I feel they must pay a proper price and, based on current information, I don't intend to let them steal my holding at less than 310p, payable in proper liquid currency.
rivaldo: New highs now. Run your winners is my philosophy. CHT remains barely on a double-figure P/E for the year starting soon. If the markets fully cotton on to the recurring and long-term revenue model then there's no reason why the share price shouldn't re-rate further assuming no slip-ups, which there haven't been to date. It was undervalued before and is now simply making up for lost time.
melody9999: Maybe I should not share the whole article. But here is the conclusion So, having weighed up the risks, and the current valuation, I feel Constellation's shares are being too lowly rated at the current level. In fact, I believe that a target price of 250p is not unreasonable, implying a forward PE ratio of 11.5 for 2017, and an enterprise value to cash profit multiple of 5.3 times. Interestingly, a share price move above the all-time high of 190p dating back to May 2015 would be a very bullish sign, and one that is likely once investors cotton onto the value on offer. Offering 40 per cent upside to my target price, I rate Constellation's shares a strong buy on a bid-offer spread of 173p to 178p. I am only frustrated that I could not add them to my SIPP with idealing. Has anyone else had any problems dealing?
rivaldo: Agreed. This is a very good, earnings-enhancing - and large - acquisition, which will add almost $8m EBITDA at a cost of just $24m assuming the synergies come about, which they surely will given what's been achieved to date. The only quibbles are the share price used, which as bb2 says presumably relate to the date that negotiations commenced given the share price just three weeks ago, and the CEO's convertible loan at 7.5% with an undefined conversion price. The benefits of the deal in earnings enhancement terms are certainly persuasive overall. Forecasts for next year will probably increase from 18.84p EPS now I'd have thought.
loobrush: Excellent-bought in after results-looked to me way to cheap and believed that the company is one in the right place at the right time and could grow and grow in a wide open market. I also think that the profits could grow faster than turnover as they benefit from economies of scale. I often find that with some companies that issue great results that the share price hardly moves for a week or two, then starts rising. I think this is due to Funds taking time to to analyse data thoroughly before buying, which can then give rise to a significant share price increase. Time will tell.
rivaldo: Stifel are joint brokers to CHT. They last had a 271p target price, but I haven't seen anything from them since this in October last year - anyone got anything more recent from them? http :// "Broker Stifel has initiated coverage of Constellation Healthcare Technologies (LON:CHT) with a ‘buy’ rating and 271p a share price target. The stock would have to advance around 70% from today’s levels to match that valuation. Constellation describes itself as an RCM, or a revenue cycle management company. Essentially, what it does for the nearly 6,000 doctors on its books is bill and collect monies owed by government, insurers and patients. It also provides practice management and purchasing services. Obamacare (or the Affordable Care Act to give it its proper name), has created huge upheaval for physicians, complicating the rules on payment while forcing down remuneration. For the barely profitable small firms carrying out mission-critical billing operations, Obamacare adds a financially onerous level of bureaucracy that is often the final straw. For Constellation, it has whipped up the perfect storm – or at the very least a great backdrop to consolidate a highly fragmented market. Last month it made two acquisitions in a month at a total cost of US$32mln. Meanwhile in March it completed its biggest deal to date with the purchase of New York-based Physicians Practice Plus for US$20mln. Stifel’s Ken Rumph estimates that, including the contribution of the new businesses, Constellation trading on a very modest enterprise multiple of just 4.5 times and a price to earnings multiple of 10 times. “Constellation is rolling up a large, growing, sticky and fragmented market for revenue cycle (billing) management in the USA,” said Stifel analyst Rumph. "
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