One of the great things about running a blog is that you almost always receive useful feedback on your idea’s. My write-up on Safeway was for example lacking a bit in the valuation of the Casa Ley stake, but the spreadsheet shared by “rowerburn” corrects this omission. Since the SEC filings of Safeway only provide information on the earnings and the book value of their Casa Ley stake an in-depth valuation is impossible, but it is enough for a rough ballpark figure:
I think that the company will be liable for taxes when their stake is sold for more than book value ($0.89/share) so that would slightly reduce the value of the CVRs if it is sold at an earnings multiple above 17.5x. Since that seems to be pretty high I think that is going to be unlikely and that taxes aren’t a major concern. If Casa Ley is sold for $0.75/share the annualized IRR will be 28.7% if it takes the full three years to sell their stake:
Of course, when it takes longer to sell Casa Ley the business has more time to grow and generate earnings. So perhaps we should expect a higher value the longer a sale takes. On the other hand, that would probably mean that there is little interest in their Casa Ley stake. But since CVR holders will receive fair value as determined by an international investment bank if Casa Ley isn’t sold before the deadline that might not be a problem?