The company has generated positive FCF of 7 million in the TTM which may or may not reverse in the second half of the year: it may need 150 days of working capital in Q3 which would translate into an extra $7-1$10 million in additional cash required to fund the quarter, or it may have improved its cash conversion cycle so that the additional working capital requirement is negligible.
If it doesn't make it through to the next 10-K, the bankruptcy case may look something like this:
Assuming that Apollo would prefer 49% of $89.8 million to 25% of $3 million in the absence of the NOLs, the bankruptcy put may be ~$45 million to the common.
If it does make it through, then we're most likely looking at $20 million in cash earnings that grow over time -- through refinancing, debt paydown, organic growth, and a possible clawback.
This is an aggressive conservative investment and it's important to rely on your own research and intelligence rather than on my judgment.
Addendum: October 17th
Someone much smarter than I sent me a note that pointed out that (1) the value of the NOLs would likely be severely impaired in a BK because the company would have undergone a change of control, and (2) the EBITDA multiple envisaged for the enterprise might be too conservative because
(a) this is a line of work in which relationships and revenues are recurring and stable -- that is, attractive in its own right;
(b) competitors could strip out a great deal of the administrative costs in the event of a takeover; and
(b) rivals may vie not to let the other guy achieve scale on the cheap.
I've amended the base case scenario accordingly to show the range of possibilities:
I do still think that a BK filing is an improbable outcome. As my correspondent noted, the service disruption that may result -- customers not getting their DTV connected in the busy season -- may have prompted Unitek's customer(s) to prepay some of the accounts receivable to make that scenario less likely. That may be where the improved cash conversion came from.
In any case, as with most distressed situations, there's a lot to think about and hitting on the most plausible narrative is the main thing.