Q: In the past few months we have purchased a 3% position in LMN at a cost of 33.73 per share. We are currently content to hold these shares indefinitely. Currently LMN's parent (CSU) has about 20 million shares outstanding while LMN has about 250 million shares. As a sometime sceptic, I wonder if the creation of LMN (and TOP) by CSU is a tool for CSU to raise capital? Appreciate any comments you may have on this. Much thanks.
Cyril
Cyril
5i Research Answer:
CSU has not really needed much outside capital in its very successful 20-year history. It has not issued shares, but will use debt on occasion. Certainly having two public subsidiaries gives it another possible source of capital. We think this might be part of the long term plan, but we think CSU would need to uncover a very large and attractive acquisition opportunity for it to decide to sell some TOI/LMN shares. It is probably too early in the development of the subsidiaries to do so. CSU will get value if the subs. grow, but selling does give it more financial flexibility longer term.