Ann: Cardno Provides Market Update and FY16 Guidance, page-40

Was looking at the Target statement and the independent experts report valuing CDD at 8.25 x EBITDA. Really it is incredible that the independent experts operated on an EBITDA multiple in this case with little consideration of the business cycle for CDD. For me a credit analysis with the likelihood of survival until the next boom times gives this company a massive extra option value. There is no consideration of this, and this is the value that private equity have noticed.

So now on 8.25x, the val might be about $1.50 per share roughly on that multiple, but in my opinion the option value per share will be around $3.40 (post dilution), as you have an option for a possibly unlimited amount of time, that has no exercise price etc. You look at the likelihood of CDD having a year of npat in the next decade of (say) $150m of being near 100%, assign a low PE multiple of 14 to get an SP of $6. The chance of not being able to hang around and being forced out for various reasons of 25%. Assuming the SP post crap raise might be $1.50, my very rough "option" value is $3.40 maybe. There is a lot of room for argument in that, but the value to an optimist after the crap raise might really be about $5. Not that anybody will be paying that any time soon.

It is likely CDD will exit the ASX 200, so this will assist in pushing the SP down for this crap raise.