Negotiating Coyote/HPP Merger & Strategic Path Forward

You know, and then, um, and let's just make sure—

Hey, JD.

Hey, gentlemen, how are you guys doing?

How you doing? Doing well.

Yeah, hanging in there.

It's been a while.

Yeah, I don't know if James told you, I've got a 3-month-old now, so—

You do?

Oh, nice.

She's keeping me busy.

Yeah.

Oh, great.

Congrats.

Thank you. You got a little girl? Little girl? Yeah. Yeah, congrats, man.

Wow, what's, what's her name?

Uh, Penny. Penelope.

Very nice.

Congratulations.

Thank you. Yeah, how are you guys doing?

It was great. Yeah, it was down in the desert. It was out of Palm Springs and then, well, Joshua Tree first. I was on a little YPO retreat in Joshua Tree. Then I went to the Vintage for a day, James. Nice. Yeah, it was quiet down the hot— hot but quiet. Um, anyway, how was Joshua Tree? Cool. I've never really— I've just kind of passed through there. We haven't spent real time in there. So Bosco knows, we stayed at this really cool kind of kitschy Airstream camp. It must have like auto camp. Yeah, yeah, guys. Have you been to that?

Not that one, but I know those guys that started it.

Uh, yeah, they've got like maybe 40 trailers, a little pool, and a cool little lobby reception area.

Yeah, one of the family offices that I did some work for years ago went in on some of the original properties with those guys. They're real cool. They do really well in certain areas.

Do they do well there?

I don't know about that one. Like, last report I got from them, like, they had one that was just sold out for months. It's almost really a proximity of like, like, all the ones like within like, uh, of San Francisco are just like balls to the wall. But like Santa Barbara is really hit or miss.

Pretty busy. Like, it was like there were a lot of people in the lobby, in the pool, hanging around. Yeah, fairly. I, I also wondered if— I looked it up. I was wondering, does Airstream own these places? Because no, I know if it was a way for them to get there, but, but you're right, they don't.

No, they don't. They just like— I mean, I bet they wish they did.

Yeah, it's good for them. They don't need to. At least they're getting some good exposure for the trailers.

Uh, and these are all refurbished, right? They're not They don't make them.

No, they're brand new, man. They're like single room Airstream trailers, like 40 around a kind of a pool and a cool lobby.

And they do, um, they do like some refurb on— like they do some like customizations for it, um, like to tailor it for more of like a hospitality purpose. Um, and like insulation's improved, like a bunch of like the things. Like it's because they've turned it into like an actual hospitality asset, which as you guys know like, yeah, different construction quality than, than anything else.

Yeah, yeah, that was cool.

But right on. Vasco, where are you in the world today?

I'm in London enjoying some proper British, British weather, middle of winter. Um, I tell you, I was in LA in January. It's pretty spectacular.

Nice.

Yeah. What are we, what are we doing here, guys? So what are you thinking? Uh, I guess where we left the last, uh, you know, we were gonna maybe look at some kind of model where you layered in their assets with your existing business and get a sense of, is there a real business here? Can you, can you, can you really pull this off? And you, you kind of had the idea of plugging it in with maybe Reverb, one of his, uh, live event divisions there. That, that kind of got me a little excited about it, thinking about maybe you can get a little more, a little more scale, so it becomes a little more of a sellable business.

Yeah, because as is today, anyway, yeah, I don't know, is catch you up kind of on where we are with One, the discussions, but two, what it's kind of looking like today. So more or less, how are we underwriting this mutually, collaboratively? And then I think from there, getting a sense for, yeah, what do we think the actual, like, long tail prospects of that theoretical entity are. I will tell you just right off the gate, so that scale piece is probably the most important element for that post-transaction because you'll have all of this scale that you need to pump as much revenue through But if you're still tethered to count of shows in a particular market, yeah, when that has not been up and to the right, as it was for the first 15 years of Peacock's existence, like, that is— that's the, you know, unhedged risk of this business. It doesn't matter what your economies are. Um, so I think it'd be interesting to look at that. I think that as a macro kind of like concept, this is— this whole sector is just one giant special situation. So any conventional kind of valuation or transaction mechanics and methodologies don't really apply here, like, because like there's— you have so much sector headwinds. 3 years of 100-year floods at least. And you don't have— yeah, like, you have just like— you got a bunch of skeletons. So, and then you have a bunch of parties that are massively distressed. And I mean, they are beyond life support. Half of them are in hospitals. So there, where we, where we feel we are in that is we're a right-sized platform that has the ability to kind of like absorb, to use like cell biology. Like we are there to absorb trash at this point. Like, like we can take whether that's Coyote's trash or whether that's BI's trash. Or even with Haddad's crash, there is way, way, way too much supply in this tiny sector.

And all of these operators are against the ropes calling us, asking us, like, like, let's just say Haddad, who has a, you know, the whatever, they, I don't know, 70, 80% of that market share. Are they, are they doing okay?

But New York, no, no one is doing okay. That's what I'm saying. There is not— no one is, no one is safe. Like that we are cash flow positive is an anomaly, but that's also because we are the most diversified in terms of our like customer segments, and we are like dime store Coyote in terms of our, you know, reach.

The question is, do you even need Coyote then if you're right-sized now? Why even fuck with that? Like all the, all that complication and all those assets that you gotta— you'd have to, you'd have to get rid of anyway.

It is the— it is, it is— you have to— if they're— it's just fucking market share. It's all zero-sum. So they are not running their revenue profitably. We could.

And that puts us in a position where we're What do you think they're doing right now? Maybe, you know, I know exactly how they're doing.

What are they doing? Report on it every 3 months.

What are the— what top line— what are their numbers right now?

16.

16 in rev. Uh-huh. 1.6 rev. And what are they losing on that?

4.7.

4.7.

Q4 of last year.

16. And it was like 80 when we sold it.

You were more—

no, we're about 80. We were trying— we were sort of pro forma 100, like, but, but what was actual—

oh, then maybe 2021 was more.

No, I don't think—

and what James just is talking about is Q4 of last year. I think he's quoting Q4 number.

Q4 number. Yeah, but that— well, that's their year-end for '25.

That's their— no, so year-end they're going to be— what is that, JD? Like basically $62, $58?

We're looking at— when we look at it just transportation, like we're excluding the stages, all that.

Just transpo.

So if we look at just transpo— or transpo, production, supplies, locations, all that, excluding the stages and the grip and lighting, it's $35 million for 2025.

And all in is about $60 million.

Excluding stages. So including just pro supply, location, pro supply, transpo.

Correct.

They're doing $35 million and they're losing what on that? So they're losing—

losing $20 million. They lost $20 million last year on that.

On that, on that, on that $35 million. Correct.

So when you include the administrative overhead burden, that comes from the HPP side. So they lost $10 million and then $10 million on the administrative burden. So it's $20 million combined. But they have pro forma adjustments where they say like, well, if we didn't pay this and if we didn't pay that, they can try to get themselves to negative $10 million. And then if they say, well, if you don't include the admin overhead, then we're going to say we're break-even. But full, like, stop without the adjustments, they lost $20 million last year. Okay, and the total company, um, when you include the stages and the grip and lighting and all that, they were $65 million last year and they lost $27 million.

$67, $27. I actually would have thought it would have been a little bit worse. I mean, in terms of the revenue, I thought they would— the revenue number would be a lot lower.

But so they did. So $152 million in '22, $70 million.

Pull up what you were looking at.

Yeah. So I'm going to look at this field right here. This is provided from them. $152 million revenue for everything in 2022.

That includes Sunset? Is that right? That includes your Sunset stages?

No, no, that does not include Sunset stages.

This is Zio, Starwagon.

Oh yeah, yeah, yeah.

$70 million in '23. 80-ish and 24, 65 and 25, losing $27 million. The pro forma adjustments here I kind of ignore because they're not actual— they're not truly, uh, adjustments.

They haven't realized them, right?

I forgot the Star Wars design. I'm just thinking pure coyote, right? Sorry.

Okay, so we did— we took— they have a lot of breakdown views, um, so we pulled out all of the views that we thought would convey in the transaction and we left them with the stages and the G&L. So on that, they made $35 million— no, they had $35 million of revenue and $55 million of expenses. So they lost $20 million. And that view is here.

I can show you.

Okay. But while he's pulling that up now, and now we kind of reset that it is not Jeff Bezos. It's Coyote, Starwag, and Zio.

Yeah, my bad. I got it. You got to take it all. That's right. So that's 35 and 20. That's right.

So this is their— this is their 2025 performance here.

Yeah, yeah, yeah. That's who they need.

If you focus in on just the sectors that we would— or the business units that we would carve out. That are relevant to us, which happen to be their biggest drags. And so what you then see in that column M there is, you know, pro forma 2026, um, yeah, okay, with a— with, you know, what is effectively $15 million in personnel cost takeout. Like maybe $800,000 to $1.2 million of insurance and like some eventual real estate cost takeouts. But by and large, it's really just one company's revenue plus another company's revenue plus some 5% kind of price increase, like kind of uplift on the revenue side. But you're not modeling some massive surge in show count or, you know, return to the late 2010s or 2021 mean, you know, like performance. So you're, you're really just putting these two companies together and taking the costs up.

What are you assuming on the utilization on that?

Whatever the utilization was for 2025 plus 5%.

So 25 plus 5 on their side and Yes, you're not, you're not, you're not assuming any uplift on utilization, just a little bit of pricing. What's your— what, what's your utilization? 50?

We're probably 47-50% today. That's actually—

um, Theirs is what? Well, I don't know what, 20?

What is it? Theirs is sub-30. Um, but the— again, like, we took really dramatic action over the course of the last, like, year and a half, really the last 2 years, and they just started to take that action last year. Yeah. And that's really where— and like, that's really on the real estate side. And you mentioned locations. Locations is gone. They shut that down back in July. So really, they can do some of this stuff, but what they are structurally precluded from, because it's a one-way street, is of the 287 employees that remain, 103 of them are under a union agreement. And the overwhelming majority of that union workforce is under this like fleet maintenance agreement that they signed 3 months after they closed on y'all. And increased personnel expense by 40 to 46% in some cases. And now they're just kind of stuck with it.

Yeah, those are all Lewis's guys, right?

Those were all like fleet maintenance and paint and body and other shit. Like, and so, and we're not even really, like, we're not really posturing here like you're walking away from them 100%. You really can't. You need, you need the union agreement in New York and Los Angeles for that motorhome commercial vehicle kind of servicing. What you don't need is the fleet maintenance paint and body piece. And so what our structure like contemplates is, um, basically a tax-free like contribution of their assets and operating leases, but none of their employees, to a drop co, what we colloquially call super co. And we contribute assets and operations like personnel, operational know-how, if you will. And in that, they are able to walk away from the union agreement that is killing them. They keep stages, they keep grip and lighting. We take the West Hollywood stage because Versatile can use it. Um, and that's—

so, so just, Jim, to clarify that, so the $40 million asset value over there on the left, that's not a purchase price, that is a value of the assets they bring into the thing. You're not paying that number.

These are— so That is right. We wouldn't be paying that. That would be their contribution. That's also a fill number right now. We need to understand what assets they're contributing to the deal to help anchor the valuation itself, because that's what they're going to get credit for in terms of their contribution to the holding company.

Because I'm sure, I'm sure you all listened to good old Victor last week essentially saying, okay, this has— the business has no, no debt, probably also has no value. We didn't say that, of course, but That was the message.

The language is he's going to manage it down to flat, and we're like, we're offering them an option to do that.

Yeah, I mean, my interpretation was that, look, it is about more eliminating liabilities, right? More than—

instead of like, it's a liability management exercise, right?

Right, right. Yeah.

But to the actual question there, that $40 million, there's no cash consideration here, right?

Right.

Okay. There's no cash.

Okay.

Yeah.

In a Okay, that's that. Like, you would contribute that 40, and that would be 40 in equity to this new co-op?

You contribute ABC number amount of assets, whatever the carry value is, effectively, and that is their contribution. We contribute the same plus operational know-how to achieve a majority stake which is required for them to be able to stop reporting on it on a consolidated basis. And we give them the outs that they have now publicly committed to needing by the end of the year. It's also pretty straightforward mechanically, you know, it's not like some incredibly cumbersome process that we're contemplating here. Really, the biggest hurdle to clear at this point is what's the remaining carry value you have on these assets, and how big of an ego hit are you actually willing to take? It's just carry. It's a built-in ego hurdle that we have to clear at this point, because we've been prodding them for 0% carry on their part, and they have not responded favorably to that. At the same time, I don't think I don't discount that the things that they are contributing have some semblance of value, but I also would say you don't get credit for the value we're able to bring to those assets.

Yep.

And what I told them on Thursday, because prior to this our conversations had really been kind of around— they wanted to shore off any financial or operating responsibility, but they also wanted to participate in any future upside down the road. And I was like, you can maybe have one of those things, and whichever one you choose is going to kind of be the lever, but you can't have both. Like, short of really writing a— stroking a fat check to this thing, you can't have both. It also kind of goes against like what their need is because I don't know if y'all did listen to the call, but like every fucking question was about Coyote. And like, and so I just think that from a where we are standpoint and really what, when I put that to them, they then softened their position on it where it's like it's not binary. It's not black and white. They concede that they will be funding losses on this business for the foreseeable future. So I think, like, I don't know, maybe there's still hope on their side that there's value here down the road. But like, the value, until I think we can solve for a larger scale or a larger format customer channel, a la the CES piece, your unhedged risk is show count. Or you can change the underlying business model across which these companies transact with decision makers, which is to say Paramount, meaning Warner's, go to Redbird, go to David Ellison, you say you need to cut— you had to cut $2 billion before you bought Paramount. You probably need to cut $5 billion because you got all this duplicative shit. In the midst of that, here is this fully scaled and distributed across the footprint that they're going to be making shit company that is able to do this for a fraction of the cost and let you eliminate personnel as well. But you can't underwrite to that. But that's what you actually need to solve for the demand risk that is still inherent in these companies, regardless of if you do this deal or not. But what I really think the opportunity is, and really it was that conversation that Michael and I had, I don't know, 2 or 3 weeks ago, was you put these together because you can. Maybe not necessarily because you should. I would argue you should, but you can, and you can do it really capitally efficient right now. Like the underlying kind of industry life cycles that these are in is in shakeout. Like, you know, you've got firms on the ropes. It's all about price and economies. So maximum amount of revenue you can capture, minimum cost. But once you do that, as you see, barring some kind of like a change in approach to how you're filling the top of the hopper or how you're capturing market share, you're still doing something that's not super sexy. Like $68 million in top line against $11 million of EBITDA. What are you getting for that? Probably not much, I don't think.

So it's really— out of that $11 million, that's not cash flow either, because you got to— what are you cash flowing on that $11 million?

This contemplates virtually no debt.

Um, so, hi, CapEx.

What, maintenance CapEx?

Yeah, well, no, but just look at the blue line there.

Blue cash.

Yeah, yeah, where? CapEx. Yeah, I mean, you're not gonna have a ton, you're gonna have some, but like, you're all— some of that CapEx is going to be paying to decommission trailers you don't need, like look at that more as like it cost $1 million to pile them up high enough.

Yeah, 74 on cash flow equity. Um, okay, walk me through, walk me through this left side.

Is DES also made a mistake? They made a similar mistake a year and a half ago when they started laying out north of $100 million of cash to start rolling up coordinator fleets and basecraft. And so they bought— what's that?

Wait, who's that first one? Coordinated fleet, would you say?

Coordinator fleets. So think of 10 different transco coordinators that each owned anywhere from 10 to 50 pieces themselves. Uh-huh. But anytime they got hired by a show, yeah, yeah, that equipment was going. And then if they had a bunch of coordinator fleets, whatever coordinator was in, not bad. Okay. Um, and then they bought Basecraft for $70 million, um, which was pretty much, you know, insolvent at that point, and itself a hodgepodge fleet with very little operating scale. And then they tried to tuck it into CES itself. And we talked to CES in September of 2024, and their stated goals were, you know, they were doing about $130 million of revenue at that time. They wanted to basically double that within the next 2 to 3 years to be able to sell it, try to get it to $100 million EBITDA and sell it.

And that includes all the power generation and everything that is end-to-end CES.

And, and a quick note on this, CES is the first kind of big platform that their private equity firm AIP started.

They started it, the first one, this AIP guy, first deal.

It's their, their first-time fund. And this was a pre-fund deal that they did that they then commingled funds with Fund 1. And that was in 2021. And they're about to start running up against fund mechanics stuff where just like the vintage is going to need to start closing. And at the same time, CES as a standalone entity has some volatility, but great. They've been rolling up kind of similar operators across North America and into Europe. Great. They bought studio services companies thinking that it was going to be a counterbalance to the live event cyclicality. And they thought that they were timing the market right. So they need to get it to $100 million EBITDA in the next 2 years, try to flip it. They're going to start running up against that. They spent $100 million on this coordinator stuff. They are— they are— they have gotten kicked in the absolute teeth. And then they lost their rainmakers, their equivalent of, you know, whatever, Ivan or whoever their biggest— whoever y'all's biggest salesperson was at Cutie. They just lost that guy.

Where'd he go?

Industry. He left the industry.

You love it.

They're making all the same mistakes that Hudson did. They're not integrating the studio services platform into their existing kind of infrastructure. They're paying lip service to it, but it's not happening. So enter Jordan Reaver, who I assume in the last month— it's just even leading up to that— is looking at all of this and has the stated goal that the previous CEO, Greg, told us, like, get it to $100 million quickly and flip it. Yeah, um, I bet money that AIP is up against their risk ropes where they are not able to contribute to this thing much more financially because they have done a bunch already, and they're never going to be able to make the studio services division work, and they just threw a lot of money at it. And so at a time where they've got Olympics contracts, World Cup contracts, like all— every music festival in North America, all this other stuff. This thing's going to weigh them down. And so at the end, like, it's not small. It is not small, like, what they have, what they have accumulated. And at the same time, they could do more with it because they have—

stuff is in the South, right? Even those coordinators are out there.

They're not. It's just, it's not working for them. And so what Michael and I were talking about is like, okay, so if you put these two together, you end up with this. It's not amazing, but it's better than they probably are independently. But what really gets— where it really gets interesting is if you then turn your sights to the CES, where it's like they've got a similar problem. And really, if this forms, they kind of have a bigger problem. Um, because we will have built a pretty sharp katana to go run around and start cutting people off at the knees. And like, we should be well capitalized to be able to basically afford whatever dollar amount some rogue line producer throws at us. That's outrageous, we'll take it, because we're just looking to vacuum up market share, which impacts kind of all of them. But really, where I think your revenue upside comes in SuperCo is if you're able to plug in the 500 cast trailers that we need to light on fire as quickly as possible. If we don't have a home for them, you take those and you distribute them across CES's footprint. They've got 25 locations across North America, and they're all strategically positioned to be able to hit those main events. And so if you're able to actually achieve that cross-sell there there's some semblance of revenue because Coyote effectively relied on Coachella Stagecoach and these other concert stuff during the last 3 years. Yeah, had they not had that, it would have been seriously worse.

And so who's providing the trailers right now for all their 25 locations?

CES?

They have their own?

Yeah.

They bought 500 hodgepodge, I think, with basecraft in these corners, but they're all different, and there's no kind of central maintenance hub that's set up for it. And the 25 locations also don't know what the fuck to do with like a 10-station makeup trailer because they're our guys, right? And so they don't have that kind of piece figured out yet, nor should they really. Really what we would argue here is that you have What you have these bicoastal maintenance hubs that will exist just by nature of putting these two companies together geared for this equipment. And then CES, what CES does have is a very large logistics arm that's constantly milk running. They are constantly milk running to and from wherever the next music festival or kind of location is. So they are specialists at repositioning trailer-sized assets across the country. And, and what they, what they have not figured out, but what I bet Jordan will help them figure out, is that the way they've been trying to win business in this sector is not it. Like, they've got an army of little sales creatures out there cold emailing line producers asking to get a shot, and that's just not working for them. So I would say that like that would be where the problem— I shouldn't say the problem. On a standalone basis, this deal makes sense. Like you put these two companies together and, it's better off. You're still betting on— I don't say you're betting on there being some uplift, but you're kind of still exposed to that risk. Really, where it is, is it's still kind of contingent on a bit of execution risk on being able to tuck it into a CES type thing or a Manhattan Beach Studios. Ackman's also against the ropes here.

MBS is—

has a different model. MBS has a group of basically 100 stages across the country where they pay rent and manage the grip and lighting for those stages as a value-add to the independent stage owner. And so if you tie SuperCo into that MBS network, Now you have, you know, ask— now you have that footprint to plug those excess assets across as well. There's some potential future upside, like, kind of on that piece. Like, look, you've got Sinowise out there too. He got a great deal on that, and he's doing something really weird with it. I don't really know what he is—

what is he doing? What is he doing?

It seems like he's really trying to be good, like fully vertically integrate with content creation. I got a call from a friend who's a documentary— like, he's an unscripted producer who had a friend who's a writer.

Back up a little bit. I get, I get, I get that you're sort of the sort of strategic, um, you know, these, these opportunities here with— but I, I want to, I want to fully understand the numbers on this page here and what, what what's being proposed to HPP? Um, because I— because that is what I would take to either Joliet or Reber. I want to be really clear what it looks like, um, combined, right? And then, and then, then, then, then we go talk to Reber or Joliet. So who's Joliet? Uh, ADC. Oh, with whoever, ADC guys. I've already mentioned this to him. He knows that this— he's kind of keen on it. I told him we might— we'd have some underwriting to show him at some point soon.

I think the question— and this is honestly a question you guys like— why? Because like, what do we— it's like the— I don't know how appealing this investment prospect is. So when you go to like an ADC, you're probably going to them to do some type of capital markets exercise to kind of backstop, like add this kind of capital partner to the equation here, right?

I mean, eventually you, you, uh, but first you would sort of help facilitate this with HPP, and he knows them pretty well. He's already— he's been talking— they've actually done some analysis. He said the other day they've done— they've— they talked to Victor regularly, right? Yeah. So they did some analysis for him the other day.

And so my question, Michael, is like, if we— if we pull this together and we take this to them, do we think that they have— because I'll be candid with you, we're not talking to Victor here, obviously. We're talking to the, like, triumvirate of people that they've just got, like, kind of circling Coyote by sunset, and then they're socializing everything kind of internally.

Who are you talking to?

Stephanie, Sean Griffin, and then the minion from their finance department who all report to Mark Lamas and Victor. And so what we have not been able to solve for is like, we can do all of this work with these people and we're making progress. But what we will ultimately need is some type of hedge for when it gets to Victor, because even if everyone on that side thinks that this makes all the sense in the world and the deal terms are just so, he might still like— he could theoretically not still want to do that. And that's where it's like, if ADC brings this to them, or ADC puts their stamp of approval on it, what's been communicated to me off the record by them is who is in the deal, or like kind of like the halo effect of the deal, matters as much as the deal itself, like the economics. That's just kind of how Victor is. I think Rock even kind of said, spoke to it, characteristic of—

they do. I mean, they have his ear. They're the same club. You know, Joliette and Weber know him really well. Like, they, they would— it probably wouldn't look good to have me in there. I don't, I don't think I, I help the cause because he's got a huge amount of resentment towards me for overpaying. And we still have these leases, right? And that did Some of it's gotten a little contentious, and he's not— you know, we still have him, and I, I still expect him— we expect with the default on, on the Valley things, right? So it's, it's not— and they— the settlement, we, we, we, we came to an agreement with him on a $5.8 million settlement to let him out of Hollywood, right? But even that was not fun, and he feels like we should be kinder to him, even though we have these long-term— because, because he did us a favor by over— by paying that big number. He still has these long-term lease obligations, but dude, we paid you $360,000. Because of it, I'm like, no, like, you know, you had a banker, I had a banker, and that's how it worked out, right? So it's like, he's like, anyway, so they just defaulted on Chandler. Right, yesterday, March 1st, they're not paid. So that— I, I told you, I have a PG on there. It was part of the settlement. We at least got him to cover the first $2.5 million to let them out. So now anything over $2.5 million, it gets split between me and HPP, right? Before, it was all on me, right? So, but I said, if you want out of these other leases, you got to remove me in total and remove me entirely. And he wouldn't do it. Anyway, bottom line is I probably don't help your cause that much, right? Other than maybe making some intros here.

Uh, I think you help on the front end. I think you can help on the back end. And we want Penrose.

Like, there's definitely help with that, man. You don't— for sure. Um, but like, I think it doesn't matter if he gets what he wants, you know, if there's a face save in here somehow. But I, I, I, I guess, I guess Juliet has her ear, and I would like— this is kind of a complicated transaction because you, you, you could get this to Victor without going through Steffi and the you know, the other— you'll go right to the top, him. And then we have to have him help us with— you help— has to have, have him help us with REIT too, because that's not going to be easy either. So they're just going to get transaction fees, and then if we have to go to market to get some op capital, whatever, though, they will help, right?

We have to do both. Like, I think we have to keep playing offense at the, like, minion level that we're at. And we need to establish some type of insurance policy that we will have not done all of this work for him to just come out of the woodwork. And basically what he's talking about with you, where it's like basically trying to negotiate non-commercial terms because, like, I paid you XYZ, bro. You know what I mean?

Like, that's— yeah, that's what he's doing.

That's where if we can have some type of like left flank hit where it's like some— we need, we need an adult in his ear saying you need to take this deal, even if it is against the guys like Juliet and whoever.

They have his—

I mean, we don't want them to have more than 20% of this thing unless they're really committing to capitalize it.

We don't think that they should have 20% of the post-transaction all the way out of here without even— with just the, the carry, without them having any equity, just some promote of some sort. Like, if we sell this thing or get it over here, you get X.

Like a truck insurance type thing?

Say that again. Like a what?

Truck insurance. If we sell this 3 years from now for $500 million, you get X.

Yeah, yeah, yeah, something over. We're not— he— you don't— we don't want him anywhere having any say in this.

Well, and that's what we've been also hammering hard, is that like there's no post-transaction operational influence, like there's no talk track.

Yeah, but if he still has like 20% equity, he's still gonna— he's gonna demand some kind of rights. And it's just, it's going to be difficult to make other moves. I think that he's just that way and he's, he's vengeful, you know. He's like, he's like, fuck that guy, you know. And he— I just, I would—

I kind of feel like at the same time, like, they're not in a— they're not in an amazing negotiating position.

I know, that's what I'm saying. You just take— I mean, I'm saying You don't want those, those valley leases, but JD pulled their lease schedule because, because some of those you might— if you were, if you were to— I, I don't know how to get around that because those two big leases he took from us, all that stuff in Pacoima, I know he would love to get out of. Now we're expecting—

I told you what he did with the golf course one, right?

You go. No, what do you do?

No, with Cascades, he traded the location services for the remaining lease obligation to Lewis there.

Yeah, so he would love to get out of all this Pacoima lease shit that, that he took over from us. We own one of the properties there, but we master leased another. I don't know, there's another $3 million a year in obligations or something like that with Montague and the Hugo, and there's a couple other there. So that's like a 3, 4, 5 million in annual commitments out there.

Well, you see they've got you in at like $1,500 a month for the pro supplies piece. That's what they're intercompany charging. That's— this is what they're saying. This is what we charge First applied after we bailed out of Coinga.

Wait, what line are you talking, uh, 204? 205. 205, Montague. I see.

But that's their inner company, so disregard it.

But like— oh, so North are paying 40 on— yeah, that one. Hey, Bosco, do I still have a PG on that one too? With that guy Gross, did he let me off? He didn't let me off, did he? No, no, you, you, uh, I think a couple of these landlords wouldn't let me off. They didn't want the public company, they wanted the individual on there.

I think Ross Thomas was not, was not interested in negotiating.

Yeah, so there's some— anyway, but I guess what I'm saying is if you were I don't— you don't want those leases, but if you were able to somehow take those commitments over and get out of them, that would add— that would be a lot of value, add a lot of value to him. I mean, a lot to him.

Which ones?

I don't know.

Well, everything. Do you mean everything on this list?

Because what this list is like, 2 or 4. No, you're not. I'm saying there's a couple big studio leases out there too.

So it's funny, that's something I was thinking about last week where it's like actually exactly kind of what you were talking about, is that I feel like we could actually shove for no ongoing equity stake if we took one of those big liabilities with us. Yeah. And whether that was like or whatever it was They want to be fucking done. And if you— even if you carve all of this stuff out, um, there's still a, like, negative NOI company in the form of their stages and grip and lighting. Now, they might be able to bury it in their financials, but it's still there. And even I would imagine that they would— I have to believe— if I think that they're already talking with Lewis And I think that they're talking to him on the grip and lighting and stage piece, because anytime I bring it up, they get real jittery and real jumpy.

You know he is. He's talking to him about that.

Yeah, like it would make sense. This whole thing would have been theoretically his to lose if he had interest in this or had the ability to capitalize it, but he doesn't. And so, at least not right now.

But I would say the only way to take those valley leases off their hands, you know, get them out of those liabilities, that commitment, then you wouldn't have to pay anything. I don't think you just take— take— you would have to— but you don't want those leases.

We're already not paying anything, really, where I was—

but, but they're not going to get any equity. You just give them this carry notion.

It's sort of like concept of What I was thinking is we take those leases, but you give us cash with this thing.

Ouch.

They're going to be funding losses anyway, and they know that.

It's not a bad idea. They would— they wouldn't— to buy out on those leases. Yeah.

And then that probably gives them better line of sight to break even on whatever stages they keep. In order— if, as long as they also offload grip and lighting.

That's messing up.

It's not clean, and you end up with like a— you end up starting this thing exposed. But if you're capitalized a certain way, I think what you could theoretically do is go out and try and find the next— what's that one that like just anchored Q Park. Is that Criminal Minds?

Yeah, ABC.

If you go out and find another one of those at just break even, or even at a bit of a loss, but you're able to just kind of like—

but that, that's— they got ABC still in there.

The problem is it just injects— that piece of it puts you in a like time, like a clock situation where if they give you cash plus a giant lease and you don't get someone in there like a Criminal Minds, you are not sleeping super well, even with low to no debt, which this has low to no debt against it.

Yeah, the stages are, those Valley properties are really problematic for them. They could— if you could show them an easy way out of that. And I'm not clear on that. I'm not clear on how to, how to get them out of there. But you might be right, you know, if they came, they, they might be willing to pay, give us $10 million to get out of there.

That's kind of— I mean, like, they're, they're going to spend at least that this year anyway. Yeah, but honestly, actually, now that we're talking about it, I think that's where a ADC coming in? Because that's a very objectionable deal. He is not going to like that. He's not going to like offloading all this stuff that he spent half a billion on and having to kick cash in. But it's the actual responsible thing to do, probably.

He's kind of doing it already at Chandler. This one, he knows he's got to go sublease it. He's got to negotiate to buy out of that lease that's worked. He's, he's committed to— he's committed. It's a $2 million— it's 6 more years, $12 million. He's, he's got it in his mind he's going to pay $68 million to get out of there, of which I'm on the hook for 2 or 3 of it, call it, right? Maybe. But so he's, he's going to pay millions to get out of Chandler, and I think he would do the same demonstrated a propensity to doing that.

I just don't think he likes it, and this is a big piece of it.

Yeah, it is. It's the biggest.

Like, take your licks. I mean, they, they basically took the full impairment charge last week. They've— they have $8 million of goodwill left, down from $300.

Well, So like, Oscar, do we know what, what, what terms are left on those leases in the valley?

Uh, what do we do on which other ones, like Hugo and Montague?

Like how many, how many years are left and what's the commitment level?

Yeah, of course, multi-year, a 10-year when it started, right?

So 2032.

So there's 7 more years there, or, or 6. 6.

September, right?

6.

6 and a half.

Was that $150,000 a month? Is that like $2 million a year? Close to it, huh?

No, a bit less than 150 months.

More like 120. Well, yeah, we have the numbers.

I guess the question is, you go to a banker, ADC, whatever, say, here's how they get out of the valley here, uh, we need to check for X, we need to figure out what, what their commitment level is there, and they take 50% of the dollar on that.

Every time we've brought up stages and grip and lighting, they get so shifty. They get really fucking shifty.

Well, I don't want it like, man, then maybe, maybe fuck it. Maybe they're just willing to get out of all this, right? Maybe we'll—

maybe that's really what it— that's what it has felt like.

Okay, fuck it. JD will take over those stages and do all the gear.

I do. I still think that that model works. I just think it's something that is honestly like kind of like, I don't know, gravy. Vasco, what's your thought on kind of the whole thing?

I, I've been listening to this conversation and they're like, man, is there enough upside for the headache? Because this sounds the next 5 years of, you know, Mike already has a little bit of gray hair, but I think it's gonna go pure white And then I'm there like, man, what a fucking headache. And I'm just looking at the numbers and they're like, all right, you end up with, you know, $10 million in EBITDA and we sell that for what, 8 times?

Like, yeah, exactly.

And they're like, I mean, why? I mean, why bother? I mean, it's— my question is that This sounds— I mean, I can see the logic, but I really question if it's, it's worth the brain damage. This sounds like—

I guess the thing is, yeah, you're right. But, but the thing is, if you could get— drop this in with, with Reaver's piece and get it— get it.

I think even like take it out of just like a Reaver thing. And I'll tell you that like the way I have thought about this is like We have to do it, period, on a standalone basis. We have to do this because it kind of galvanizes survival for a packet of companies that we have accumulated, full stop. It gives us the ability to go out and kind of win whatever remaining market share. You effectively can build a museum of studio services companies to ride out the rest of this industry with. But where it gets interesting is when you tuck it into a different type of channel or some type of differentiated thing. You are in effect building a baby PRG that is very studio-focused but has the ability to go the other way. And I think like that introduces to it, but I believe that that is short of there being like, basically, you need something else to happen to make this platform have the upside is how I think about it. We have to do it because we have to do this from an actual inside the sector kind of operator.

But you need enough scale and market share to compete.

It's just this lets us win the zero-sum game the market's become, right? But, and there's not nothing to that. I think as, like, again, there's no revenue upside model here, but as we start back, like, it's, it's betting that, like, we'll be able to go win market share from the remaining operators. The remaining operators might not even need someone to come along and tip them over. Like, we are seeing stress fractures in the competitors right now. But, but that does not— to me, that's not like the data point. What you're looking at is what is the count of shows in the territories you will be existing in over the next 3 to 5 years. And if you're increasing your market share of that, even if that count is going down, yes, there is upside there. We don't model for upside. So I don't— like, this is a, you know, fairly conservative, I would still say, approach. There's, there's upside to our cost takeouts, we know, and like there's some conversation about that. What I think, Vasco, I definitively agree with is that from an upside standpoint, it is contingent on something else. This is not a 1 1 3, like where it's like, oh, this is a no-brainer. This is like a special— this is a sector that is entirely distressed, and here's a special situation to like to basically establish a market leader effectively overnight, across which you can do other things. But it does require you to do other things, even if that other thing is just go win as much market share if you can, so that $7 million free cash flow becomes 12, whatever. But even then, you're still not getting a 10 turns on that. Where you get the 10 turns is if you slam it together with another similarly sized, you know, middle market type complementary firm like an MBS, CES, Senawise, or you go at the, like, kind of direct-to-studio dedicated services model while that whole end of the market is in disruption. But none of these are certainties. The one you have the highest line of sight to is market share capture.

And then the other thing I was thinking about is, look, in your negotiation with either Victor or the senior team there, you need to get, you need to get both those pieces. You, you do need to get a very distant carry if there is some overperformance. That is unlikely to happen. And you do need to get a situation where, you know, a lot of the risk stays with them in terms of your purchase price or whatever, whatever it is that, that you leave behind, because The way Victor sounds on the phone, he cannot get— he's anxious to announce to the world that this problem is behind him. And so if he could say, look, the problem is behind us, and we still have a little upside in the form of— even if it's remote, I think if you— that can be delivered in a very aggressive deal. But to do that, Then it goes back to ADC. You need like somebody in the middle who can credibly present something that if it comes from us or from you or anybody else, it's like, forget it. This is not a non-starter.

Yeah.

And I think, by the way, we have this conversation every other month. And their share price has lost another 10% and another 20%. And again, you're right, all the conversation on Thursday last week was, was around Coyote. So I think so far it's been a situation that the more you wait, the better your deal totally becomes. And again, just the conversation that we have right now, just Chandler alone getting out of that is going to cost them anywhere between $6-8 million. And, and, and you're right there close to the whole restructuring number that you discussed. It's true, if you can find a way to get that out, you can ask me. What I'm saying is that get it out, get some cash, and also push their carry far out in terms of like it needs to outperform really strongly for them to get some equity in 5 years. And my sense is that that deal is not— if presented the right way, he would actually go for that.

Yeah, I mean, I also— I think, I think you're right, Bosco, but I, I'm kind of thinking you don't even mess with those leases. Take what you really, really want. And here's what we want. Well, basically, we'll take all the, all the Transpo committed Maybe you don't have Ralston, but you just take what you need to accomplish, you know, just sort of best-in-class, right-size scale pricing power business. Don't fuck with those Valley leases, right? Let him— he'll go and negotiate himself to get out of those. He's already doing it with Chandler. So maybe don't— he's going to try to get out of those himself. And you like to say one-time restructuring, so maybe Don't put it on our plate. Just let him do that. Take the shit you want off those leases there. Let's, let's get them out of some of those leases. I mean, maybe put that back up there. You have Rawson on the maybe. So anything is transpo, pro supplies, location services, you just take it, right? And give them, give them the carry and let him, let him like come back. You really don't want those leases in the Valley. Like, it was— there was a time and a place for them, and that's— it's no more, man. You know, actually, behind us, behind— yeah, we are so fucking lucky. Even Q— I mean, Q Park works, but I— but I— anyway, you don't want that either. It's like, why? I agree with you on Fuller to get— they get to keep the commercial cats, give them a place to work. I'd almost even say Chandler at the right number, you could make that work too, because it's if you— because they probably take it at probably for $50,000 or $75,000 a month, right? And at that, with two big banging commercial stages right down the road, you could probably make it, make it work, right? It's right down the, down the road from you there. But anything else, fuck it, forget it. Like, get rid of it, you know? Now, or Sean can fill those up with the right commercial sales team. And they're— and, or, and eventually you're going to get a, uh, you know, The Office was there for 6 years, and when we had it, we had a Disney show in there, you know, like at some good number, 50 or 75, you can make, make a lot of money on it. Um, but, um, just take what you want and then we package it and then go Maybe not even Chandler, but I do think—

I think what I'm taking from it is like basically the current approach where it's taking the biggest piece of the operating business off of their hands. Yeah, it's leaning harder into kind of the aggressive terms that we actually have been probing them on. Yeah, and if we hit a stone wall there, I think a Chandler or some other Valley state is potentially a chance to bring it back in, but it comes maybe with some cash. And even if they say fuck you, yeah, okay, we'll do it and get a, get a capital partner to come in, um, and handle it that way. I still think you probably need— I guess the question and the bet is that if we still go it alone as two scrappy kids that broke out of daycare and are just like playing hardball with them at the table, like, like with his minions, that like if we hold our line, they don't break it off. But it's not like the worst they can say is no, right? But in this case, it's like we're betting that they don't just like disengage almost entirely and put us— basically flip our leverage where we then would have to go back to them or then try the side door with American Discovery Capital. But I don't know that that's the same approach. Like, do you get what I'm saying? I think the landscape, the negotiating landscape that you're across there is like Everybody at the table knows that they're kind of up against the ropes here and that we're kind of probably the only ones here at the table with them.

Maybe Lewis is too. Like, maybe Lewis could take, take some of those or stomach a couple of those stages, you know. Maybe he could take a little of that.

He's got a big people in that conversation with them. But it's— but I would bet it's not on Chandler if they're pushing for default on that. Right? Like, if you just like— like, so if we think of maybe it is Lewis still at the table, then I think so. That's why I keep asking them these questions. But it's definitely on Grip and Lighting and maybe on some of the stages. And if we think we're both at the same stage or same level of negotiation, they have decided they can default on Chandler and not these other ones because no one is interested in that. So they can shove the restructure of that. That's conjecture, but like, I— they get real shifty when we ask about like other parts of what's left behind.

No, I think, I think they're probably a year or two away of defaulting on the other ones, the other two big ones. Like, I even— and they're going to default on our windmill too. It's just that 4.5-acre parking lot. Like, there's a deferral there, and that deferral goes away in a year. In a year, they're probably— I bet they're a year away from defaulting on all that shit in Pacoima, I'd say.

Oh well, then they have to default on Rexford also.

I mean, yeah, Rexford, they gotta, you know, they're— it gets messy. But what I would say is take what you need out of here to build just a badass lean mean location service, transpo, and a pro supply business. And let's be aggressive with it and say we'll take— and just— and then let them come back to us. They might, like you said. But they're up against the ropes. Take what you feel will add the value and nothing else, right?

No other leases. And I think from like, look, this is us putting like, as I would say, this would be our base case. Which means there's still probably a bear. There is a bear that is still there, but there's also potentially like an upside. I do think that this platform gives you ability to go play the game better. But the game has become— and I think that like I'm not joking about having built a museum of these studio services brands. You have kind of like the pantheon of who's who of that legacy sale model where like You just have all these people that have the relationships and they were just missing the assets. And so, like, lest we forget that Hudson 2 years ago tried to come pay Ivan $2 million to come back and poach our entire trailer maintenance team. So, like, there's— there is the ability to go build that upside case. JD, maybe I think that's probably a takeaway from this is like, here's like what we're representing as. Here's like a very conservative upside case because I really don't like modeling the upside. But $7.5 billion free cash flow is not exciting. And we've been saying that for months. Like, I think that like, even, even if you were going to take this into like Doug, Mike, he's like, oh yeah, this is boring.

I don't want this. Yeah, no, no, you get—

even if I'm not—

even if I'm putting in $2 billion, we're just having some of the same problems. We gotta, we gotta, we gotta take this cleaned up model and say, hey, what do you, what do you say? What do you think? And we got to get Rebirth on the table and just start.

But remember, right now he has a similar problem.

Yeah, with scale, pricing power, market share, and, and, you know, eventually figure it out. Yeah, you lever your back office, you reduce another whatever, and maybe it gets— it saves his ass too. But you need a banker with all this crap, I think. And I wouldn't do it without someone who's gonna— because eventually they're gonna get the sale on this thing. If you get— you can, you know, they're gonna get— yeah, I mean, and they would do it. But let me ask you one question on these leases here, right? That you have up on the screen. What's the— oh, there's Penrose. Yeah, that's the defaulted number, the 65 line 210. That's our property, right? The 210, yeah. So what is the— what's the 87 one? This Balboa line 207. Is that 207?

Or 208, that's Studio Services, that's the old Studio Services building.

So they're paying that, that they're on the hook for $87 a month on that one? Yeah, that's the Cascades piece though, isn't it?

No, the Cascades piece is line 215.

Yeah, I see that, but do you need, do you need that $87 one? This whole world, do you need that exterior services thing if he had Penrose? No. Yeah, you don't need that. But you need any of that Balboa shit, right?

That's right. I think you're looking at the preferential treatment of different landlords.

Yeah. So Lewis is getting—

I think you're looking at how you rank against Lewis as a landlord here, like, because they're giving him fucking a $6 million revenue-generating asset pool. In exchange for dirt, in exchange for an airplane graveyard. Like, 3—

like, the remaining lease year, they were tripping the $6 million to those 300 toilet trailers.

That's how— what they— I'm saying they generated $6 million of revenue before they shut it down. Oh, and then he bought a bathroom company out in San Bernardino and is like getting his piece of the gang back together. And like all this. So he's, you know, doing his thing. But my point is, no, but they have a 2029 expiration there.

That— but yeah, okay. And then, oh, so the, so the SOMAR stuff's— they're done there in August of this year and June of next. That's pretty good. So that shit goes down by the time you get this all done. It'll probably take a year, uh, maybe not that long, but—

right, look, structurally it's a pretty straightforward deal. Like, there's— it's honestly also kind of light diligence. Like, there's not a ton— like, they'll have to— if, if they don't have to, like, diligence us, it's even less. Like, I think, like, It's possible to get this done. It's just putting the pieces together. We know the 721 tax-free reward works for them right now. We know that, like, there's even more personnel cuts to be realized. We just don't have visibility into what that is. We're going to take their guy Sean Griffin because he knows a thing or two about, like, what they've been leaving on the table.

Um, you want Tony too?

You want Tony? Yeah, he wants Tony, so that's fine.

Um, wait, wait, wait, who wants Tony? Sean Griffin. Oh yeah, yeah, yeah, Sean Griffin.

Um, but this like bloated administrative layer either, so I think like—

so what I would do is like, hey JD, in your model, did you bring all these— you brought all these leases over?

This is everything they provided to us.

So this is us just assuming we take everything and highlight what you want and what— and here's what we'll— here's what we'll take off your hands. You're not taking all these leases. You're taking what? Right. Right size, because you're going to get rid of 500 or whatever number of units and you don't need all this leased land.

Right.

And take take the 3 or 4 or 5 things off this list you need and drop it in the model. And take all the Transpo shit, take all of it and put it in the model, whatever it's worth on there. And, and then, then we go to, then we go to Joliet and Reber. Joliet first, I would say. He already knows about Reber. I told him about Reber. So we are Joliet with the sort of You know, just a question.

Juliet would do it without taking a retainer?

No, you'd have to give him— but it's a, you know, $5,000 or $10,000 a month. It's probably worth it, you know, against, against his fee. It's worth it.

There's these, those guys, if he's $5,000 or $10,000 a month, $10,000 a month. Yeah, he's not— as long as he's not like a $75K upfront retainer.

No, he won't do it. He'll like You know, he's going to get his fee, like, you know, against— but yeah, no, it won't be. We could— did I pay him $25 a month? I might have. $10 to $15, I think they would do it. You know, we'd have to talk to him about it.

But, um, JD, what do you think?

It's kind of a low risk. Um, option if it's that cheap. I wasn't expecting a retainer to be that cheap.

So that's a different calculus. Intrepid was throwing $50,000 to $75,000 as like a friends and family thing.

Uh, retainer a month?

No, one time.

Uh, one time, $50,000.

Oh yes, for the retainer. But then it was like, then we didn't even engage with them on what the success fee would have been, which I have to imagine was not zero.

So like, yeah, they would get it probably another couple percent at least on whatever the, the 60, the combined company value, you know, whatever, $80 million or something. They'll probably get some kind of feel of that.

Yeah, they would get a success fee. Yeah, what the mechanism on that is would be interesting. Because there's no cash changing hands and like the valuation of this is murky at best. But look, I think we are at a place like here's the biggest kind of question mark that remains outstanding. Setting aside like what's your post-transaction equity split? Because if you just think about it in terms of like an investment banking does with building blocks, there's a highly motivated party. There's— we have a structure. We have the— like, we have line of sight to the kind of base case. What we don't have is— and probably the only thing that's really missing at this from this high level is the labor relations kind of strategy. We've asked for the collective bar— we asked for the CBAs last week. They're going to send them to us. We have enough of a thought on how to handle that to be dangerous, but that's one that you really, really can't fuck that one up. So that piece of it gives us the ability to basically go into just about any room and have a high-level to medium-detailed conversation about this. What I don't think we have, but like where I think both parties are going to be stuck at is the minions that we're talking to. They react, you know, adversely when we throw out the concept of you don't get anything on the other side of this. They're also not decision makers, but they probably know the internal temperature. I think you gotta— I have struggled with how we bridge this gap, and I, I have often thought it's ADC or someone else, but ADC has been who they've seemingly favored over Intrepid. They used Intrepid because y'all had ADC. Like, yeah, so we can get their kind of strategic advisor in his ear and like, look, this is a good deal, you're a REIT, why are you Why are you talking? Why are you worried about maximizing your value stake in this, like, stage 4 pancreatic cancer? Like, for their business, like, it's just, you know, I think if, if they, if, if the ADC can help us bridge that gap, then I think that we probably shortcut a lot of the, forgive the expression, pussyfooting that's been going on where they're just like they're wanting to ask really tactical questions. And the reason why they want to ask the tactical questions is because I think that they know that it's going to be very difficult to capitalize this with some third party because of how this is looking. So they want to be able to gain confidence that the post-transaction go-forward entity, if it's not cash flow positive, it's on a path to being breakeven faster than they can do it on their own.

Go back up to the top, JD. I want to see the— I want to see what this combined company looks like.

Yeah, you had the— and then while you're doing that, I want to just try to reframe us because what are— what is it that we're trying to solve for here on the, you know, inside this calendar invite? Because we wanted to give you— we wanted to just basically throw this at you and it's turned— it's been a very helpful kind of brainstorming session. Michael, we talked about kind of like your participation with Roth, where I agree that it doesn't make sense for you guys to be at the table with us per se, for all the reasons we just talked about, needing ADC to run interference. But I do think that like we have enough that we're at a point where we can— we know what the opportunities are down the road. We know what we— we have line of sight to here's what happens when you put these two together and then some. We have to bridge this valuation gap because that's the biggest piece of the term sheet that's missing. And I don't know that we're going to expediently be able to do that with the people that we're talking to. And I think there's probably higher risk continuing down that path versus continuing down that path and engaging ADC to start doing their thing on the side. So that when— so that we can converge at a point where this is what we're— this is what we're talking about with them across the table from them, and at the same time ADC is coming in at the top so that when we put a term sheet across the table, they meet at the same time and ADC's like, you know, you just deal. Does that make sense? Is that a realistic plan?

Yeah, you know, we, we I would just hire them anyway because, like, hire— it does, James. And but, like, I hired, you know, banker on the buy side, right, to go to try to do what you're doing, right? And I did. That's where we first found Movie Movers on the buy side. I paid— actually, I paid Sage, right? There wasn't really another thing, but we found Movie Movers. On the buy side to help us roll shit up and then, and then sell it, right? And, and you would just— I mean, you would have a couple options here. We have, we have HPP and maybe something over there with, with, with Reaver, right? So to, to engage someone on the buy side is something I probably would do if I were you.

We don't need someone on the buy side.

We are obvious. No, I think you do. With something like this is complicated, or, or to go to Reaver or someone Anybody who has— yes, it helps. And, and if you're going to buy a $10 to $20 million business somewhere in there, it's good to have them even. Anyway, I would do it to help you get— I just think it helps to get you to a finish line for a decent exit, right? They're motivated, you're motivated, they get a big, big success fee at the end. They're smart, they know how to do all this shit. They're your Like if you had a private equity, you do that too. But, but, and they might find some equity for you too, along the way. So just having a banker right now, I think is like, solid next step for you to get to get to some exit on the buy side. And, and this would be one of them, we bring a couple deals to them, we bring this. And, and this is, you know, so you got your EBIDs at $7.7 million, You know, you're right, a couple years, you're at 11. That you, you're gonna, you know, you're gonna take, give her some other leases in here. Yeah, the room, it can get better here, right?

If you get another plug-in, you definitely can. And remember, that's the 5%. This is just like a 5%.

It doesn't actually contemplate us going out and winning, getting rid of hundreds of units and all the maintenance and all the shit.

That goes along with it? It does not contemplate that, but that would happen.

So all the insurance and the maintenance and the storage—

it does not contemplate us taking it out into the middle of the Arizona desert and lighting it on fire, but we would.

I mean, each unit, like, to us was like $15,000 or $20,000 a year to fucking just store it, clean it, sit there, fix it. Insurance, registration, more than that, 20 or 25 a year per, like, just to fucking hang on to it, right?

Yeah.

I mean, look, I think you're taking a bunch of them down and marking them non-op, so you're not insuring them and you're not registering them, and they're probably doing that right now anyway.

But like, I think— okay, but I think you're right. I think the key to this is, is getting it into live events. Because there's nobody on the, on the planet— like, you're right, no equity, no capital market. The, the film and TV business, no one dig— no, no capital market people are into film and TV right now, right?

No one wants picks and shovels for film. Not right now. Maybe AI has been addressed or production volume increases or unless you are able to tuck it inside of one of those ecosystems. Yeah, then it becomes attractive again.

But again, Jordan will figure it out. The guy's quirky and fucking smart. Reaver, you're like, he knows his shit and he's tireless. He's a tinkerer and, and you know, like, he'll figure it out. He will. And, and, and, uh He's a good friend of ours, of Coyote's, big time. Okay. I mean, you'd have to sort of— in the end, I do think, you know, we're not really talking about branding or marketing, but whether it's Vee Studios or Versatile or Coyote, you got a uniform at all.

I disagree. I wholeheartedly disagree on that point. Number one, there's a pretty considerable expense associated with that. Number 2, we have a pretty good track record now of showing how keeping these random companies segregated, their unique customer segments still respond to it. So the people that wish Starwagons hadn't become Kiyoti, they're going back to Starwagons. The Kiyoti people go to Kiyoti. Like the Avon people, it's a fucking 5-ton, but they're still coming to Avon for their 5-ton because they like Julie. Because it's where they've always gone. And the people that are going versatile, like, like that whole— it's still kind of like an homage to this, like, you don't want to create that monolith because the actual— still currently today, those decision makers are anti-corporate even though they're all employees of the biggest media corporations on the planet. So if you're able to keep it from being a monolith, number one, you don't have to go through the expense and headache of getting all of that stuff done. You do need to have each of these individual brands at a certain brand level, but we would never put a marketing dollar against Avon or HDR. You don't need that. They, they have gotten to where they are without it, and we would say it's a very low ROI. You need it on Versatile because there's a much larger cultivar market there, and probably some other thing. But I think you have kind of this umbrella parent company that everyone knows owns everything because that's, again, They know we've bought all this shit. We just haven't gotten dinged for it yet. And what we have the ability to do here from your marketing narrative standpoint is jailbreak, uh, Coyote and Starwagons, restore them to kind of what they were, and then you just have this kind of like hodgepodge of brands that are reflections of who they actually serve. The people that were Starwagons only weren't coming to Coyote And the people that were QOD weren't really going to Starbucks unless they had to.

Just keep all the brands as is, maybe extend versatile to WeHo, right?

Yes.

But like, you have— you're looking— and then if you— and then again, this is actually kind of where I feel like if you take one of their larger stages off their hands in exchange for a cash payment, then you actually have like a QOD what it was. Um, and I think that actually can still work. But you need to have it, and you need to have it kind of tied in with that.

Yeah, criminal minds, you know, it doesn't matter right now. It's a 7-figure ordeal. If you got it put together, then, you know, that becomes a conversation down the road. But you like— is as long as you got the right people running each of these divisions.

Yeah, that's what it comes down to.

You have a synergy. And there's no weird inner company bullshit of you're billing, you're sub-renting from this to that division, that crap.

You have intercompany, you have free-flowing inner company, and you have a synergized back office. And the people rent— we see it today, the same production will rent a 5-ton from Avon and then go get their cube truck from Versatile.

Why?

Because they always have, and they talk to two different people there. And like, and so it's just kind of like, um, yeah, I don't know. So look, I think what we can do—

I—

okay, so I agree. I think that ADC— I think it makes sense to go talk to them. I think we're as far as we're going to get from a like data capture perspective at this stage. I think what we can do is build some— do some scenario analysis very high level of just kind of like where these things can end up. And I think we can pull together just kind of like some more synthesized or just build talking points around once you've done this, here's what you can kind of do. But the reality is it's not like we've all established, it's not gonna be super attractive to an outside party unless you are able to gain high confidence in being able to achieve one of those kind of like potential next steps.

Both on— yeah, what I would do then is probably scrub this a little bit more, the 26 and on, and add, add some of the savings of, of, of the dispositions, and then including the yards that are not coming over, the facilities you don't need, you know, on that list, you know, you take these and you, and, and per— you come up with a number per unit, whatever it's, 20 or 25. Per year, you know, you bake that into these numbers and scrub it a little one more time.

And then we actually do need all those locations, just to be clear. We need them all. There are so many assets. Okay, like, it's really a race against time to decommission so you can take advantage of their natural expirations on some of them. But like, yeah, even if you have 400 or 500 assets left at the end of that, you still need a good portion of that. You can offload some of the DWP and some of the excess shit, but it's not a huge savings in real estate, basically.

I will say selfishly, Vosko and I are building this epicenter thing up. What we did over whatever, 30 years was built a nice little portfolio of real estate. Having a real estate intensive opco brings real estate opportunities. And be smart about it, right? And if you guys— we all become LPs in these different, different real estate pieces over time, and you create just another, another avenue for wealth generation. And you should be fucking owning these properties you're spending millions a year on, right? We did what we could.

Uh, but you want to tell us, Kalanga— can we get a second option on, uh, Kalanga?

We'll be your stocking horse to pay for, uh, I like your property, the, the picture card property. It'd be perfect for it, right?

Oh man, that lady is so sweet.

And you're gonna buy that property?

No, you know what we're paying there? I told you, all right, we're paying less than we're paying you at Coinga.

You are? Yeah, so you gotta, you gotta get a purchase. Do you have a purchase right on that?

No, she would never give it. They own it free and clear. Uh, they know that it could be going for like $140,000 to $160,000 a month. We were able to tuck it in on, um, the heels of that cinema vehicle, kind of like 30-year lease, and there's a fair market value reset on that next year, so But differently, we might not be there next year and they're never going to sell it because the whole family depends on that property income.

And it's—

she's like so sweet and so 80 years old.

And like, that's— anyway, the point is, like, if we— you've got the real estate infrastructure in there too, we could own, if not that, other things along the way, right?

Yeah.

No, I think that's what I'm building some long-term wealth.

Do that. All right, so I think that we can build— scrub this a little bit more over the course of this week.

Let's go see Juliette and, and we'll talk to Reber.

I think let's get that conversation set up. I think it's like, let's— Juliette, you disaggregate that because we can be done with this scrub today, tomorrow.

Okay, um, I'll tell them we'll go see him later this week or next week. Yeah, I can fly in. Um, like, if some of these big leases are, are coming off and you don't want them, get them out of the numbers, right? Just be really tight with these numbers, right? And then you can make it— what I might say is suggest approximately, here's what this other live event type business might look like. You'd add another, I don't know, 50 and 10 to this number.

I don't know. I think what we would do there is we would take Coachella earnings on Starwagons. Mhm. Take the unit economics of Coachella, whatever y'all had, you know. Yeah, Evan and them constantly talk about that. But you take the unit economics on that and you overlay that against the music festivals across North America that we know CES operates from, um, and That's where you build a dispensable kind of revenue case for it.

Plus, I would put like, like, here's your organic, inorganic, you're going to go acquire or, or merge with this live event equipment rental business. Bam. And that's worth this. And what that's, you know, just to give them an idea where we're going with this.

I have some ideas because there's some other stuff that's coming down the pike that, yeah, or there's a couple other acquisitions you You put the inorganic shit in here and this is what we're looking at. Well, candidly, it's not these other distressed companies in the space.

They go supernova. Yeah, yeah. We'll show a couple of those anyway. Well, then we go to Juliette. But I would— yeah, I'd show, I'd show a bolt-on or two to these numbers, approximate it, and show somewhat of a path to exit. Right, so that the fucking guy gets a little excited about it. Okay, this may not be, but if I can get these guys here and help buy a couple of these things and have a bigger exit, they make some real money.

So what is that number, $25 million EBITDA?

Yeah, I'd say some— I'd say $25 and $10 or $15 in cash flow or something like that. That's a pretty good little business. You can see that's—

yeah, somewhere in there, I think. Bosco, what do you think?

25 million euro with a couple bolt-ons?

I mean, you want to show something that is—

again, going back to what?

Durable.

I kind of disconnected like a while ago here because you guys are going deep in, in the operations. My only point is that Sounds a lot of work, you know, you want to show some scale, you want to show some exit that is, is worth it.

But what is— that's my question to you is, what is that, what is that threshold?

Is it 25? Yeah, I mean, if you get like, let's say you got to 100 and you're able to operate at 25% margin, somewhere in there, that's decent margins. You know, if you want to have 25 to 30% margins on somewhere around $100,000 plus.

What was y'all's even—

you sell that one for 8 times, couple hundred? $30,000. We sold it on $30,000 at $80,000, $85,000 I think it was. Yeah, yeah, but good margin, good margin. My show, you're smart about this shit, right? And that, you know, we're disciplined about doing a minimum 25%, you know, even the margins, right? We don't want like— anyway, it's well managed, right? And maybe over time it goes up a little more because we're getting smarter and smarter, right? 25, 26, 27, 28, something like that, right? Yeah, makes sense. I don't know, it's my very uneducated opinion.

Yeah, that's my— that's just my uneducated opinion that got the business sold for $360 million.

Yeah, but I, I, I put a couple bolt-ons there and show good margin and get it to good cash flow in 25 or something up there, right? That to me then gets people kind of excited, right? Okay, fuck, there's going to be a lot. Then there's some, some heavy lift along the way. At $25, if you get an 8x, you, you know, you're getting closer to $200. Maybe it's worth it, right? You know, now you're— now people— now it's worth our time, starting to get worth our time, worth your guys' time for sure. Yeah, definitely worth your day. Okay, so one more quick pass on it and then let's go see Juliette. Get it, add a couple bolt-ons on there.

Live event, guys. Yeah, a couple ways we'll take it. I'll give you a shout later this week once we take a pass through it.

Okay.

And give you just kind of like a top line. We'll send you like a little screen grab and then let's try and set something up for maybe next week. Okay, um, and I'll fly out there.

Wow. All right, guys, great seeing y'all. I gotta go.

Thanks, guys.