Toronto Star

Is Torstar even cheaper now with the sale of Harelquin?  Saj Karsan over at Barel Karsan certainly thinks so.

There are some remaining concerns we have even with the recently proposed sale:

• Torstar debt levels are really high
• Print/Newspaper revenues are in decline 
• What will management do with the newly acquired cash?  They hinted at paying off the debt but what if they don't use the money wisely?  Hopefully they don't invest more in print!

That said, Harlequin will sell for 455 million, Torstar debt is 178 million, some quick math will reveal that 277 million in net cash.

Here's some quick numbers:

At today's stock price of 7.53, the market cap is approximatey 600 million.

Pre-Harlequin announcement, the stock price was around 6.50 which valued the market cap at 517 million.

The sale of Harlequin (pending approval) will add 277 million in net cash, yet the market cap of TS has only risen by 85 million.

Does the market believe that Torstar will squander the net cash and just burn right through it?

Or is there not much faith in the underlying business?  

Couple that with the fact that Torstar calls me once every 3 months for a free subscription to their print edition leads me to believe that they are very much desperate for readership.

Some food for thought.