Vote NO ON ALL THE STUPID BOD, they have failed.
Need to know, what is the plan going forward.
DO NOT AGREE to the move to Mayland. Less shareholder rights. Look at CWH, and what they did.d
Just vote NO on everything.
We need few employees, and better management.
What happened to the subscription rights? The company did an SEC filing showing all of the info (date, procedures) except the strike price about its subscription rights offering. Then what happened? Maybe it was delayed or maybe SPPR just blew it off. No press release, no filing, nobody tells the stock holders anything. Communications suck!
They can keep the preferred dividend deferred indefinitely (or until they file bankruptcy). SPPRP / SPPRO are cumulative preferred equity issue. Issues with 5 year limits such as FBS-PA are trust preferred issues. Trust preferred issues are junior interest deferrable DEBT. Full coverage of microcap distressed pref stock, microcap debt issues and some undervalued microcap equites in the Panick Value Research report. Yahoo mail mrpanick for sample copy.
If SPPR gets 6 months in a rears on its class a preferred dividend then the class a shareholders can add 2 directors to SPPR's board of directors. That is why they want to be able to add directors. I say have one of the directors named by IRSA step down. They have done a horrible job for the rest of the shareholders.
I am certain that all negotiations are tougher when you over-leverage and overpay. Locking in the extension could be a ploy to keep negotiating.. If so, they need to move on it.
Certain documents in the filings suggest that they actually have access to "swaps" and are allowed to use them. Maybe they are smarter than I think they are? Price may be reflecting that as I type.
All proposals passed, some with very small percentage margins because non-votes by brokerage firms counted against items (and some people voted against them as protests).
Kelly Walters, president, answered questions.
Board members are clueless. Said what a great board SPPR has and how hard they work at modest pay. Said that IRSA, the Argentina company that owns the class C preferred, is involved on a daily basis. They think that the stock is under-valued and at least one director said that he would exercise rights to buy shares at $1.60, the rest sat on their hands.
The company frittered away $20 million from the class C purchase by IRSA and said it was just a bad market that caused the stock offering last fall to fail. IRSA backing out of pledge to buy $30 million of offering was said to have been a "maybe we'll buy" and not a pledge.
Company needs capital but who wants to give capital to a company that can't handle caplital? Last falls attempt to raise funds not only failed but cost $2 million which caused the cash crunch which caused the suspended the preferred dividends, necessitated the $2 million loan which reset the conversion on the class C convertible from $8 to $1.60 per share. And the board thinks that it is doing a great job.
No suggestion as to when preferred dividends might be resumed.
Future? They won't talk about it.
GW extended the loan. As lone as SPPR keeps making payments, they will extend again.
GW will lose more if it forecloses.
So, GW will not force the issue.
All of them.
You can use symbol TLT as a benchmark. It reflects the direction of long term interest rates.
Rates are going up, and SPPR just got screwed out of the lowest rates in recorded history.
If I am not mistaken, RES is going to have to produce a filing for any stock sale, which means, assuming they are selling stock in the current environment, a filing should be within the next 24-48 hours. Otherwise, there is no SlowPO, and RES' position remains in tact until they do take this company private, which I believe will happen. If not, then their equity position is dead money along with their preferreds, and they are clearly not walking away from Supertel given $3.5 in common equity purchased. I expect they will take this company private by the end of the year if not end of summer before the GW loan matures. Without the corporate overhead, this SPPR is worth $3/share to them, and with a lower WACC by redeeming preferreds, much more.
Per 2013 10-K, operation expense is about 78% of the revenue. This is not only the highest among peers, but it's also higher than SPPR's historical norm. For example, in 2003/2008, it was 73%.
1) Rate of revenue decline may be bottoming
2) Discontinued portfolio posted a gain versus last year's -$1mln loss
3) Probable increase 2Q revenues from South Atlantic
4) Capex of $380k (they might have overstated their capex needs as they have in the past).
1) South Atlantic hotels continued to deteriorate (probably snow oriented, at least partially)
2) Trevian Capital 12.5% mortgage (replaced Wachovia; probably due to breach of debt covenants)
3) Nearly zero attention to corporate expense (Walters' contract runs out this year as does Scarpello)
4) $6 mln CapEx still projected; I am expecting something closer to $4.5 mln. Rights offering will pay for the bulk of this.
5) Short sellers are in full control of common equity and are threatening the capital raise once more.
6) Common equity may face delisting once more in short order.
This is classic agency risk, at this point. This company is only viable, with the present capital structure, if it were to be acquired and management were to be subsequently let go, thus eliminating nearly $4mln in admin expense. At such a point, free cash flow is probably sustainable and with a lower WACC to say the least. Considering this company already has a poison pill built into its charter, it proves that this is not an option. I am not sure if changing the corporate charter to Maryland may be a step in the direction of IRSA buying this company outright. It seems possible, in my opinion, and justifies them putting in $2mln in common equity more now if they were just to get that money back by purchasing the whole thing in a few more months since that pathetic infusion of capital does nothing.
Anyways, Q2 will probably improve as the government shutdown pressured South Atlantic results by circa $1mln last year. I am anticipating for FFO of $750k for the next 12 months, which accounts for dividends paid on preferreds, but is pre capex.
I own no common equity.
The strangest part about the balance sheet and income statements, is that there should be plenty of cash flow from depreciation and amortization. Somehow, they are managing to spend that as well as the withheld dividends.
RES is not going to do that any time soon so long as the possibility of default remains between SPPR and their creditors. Also, the price of SPPR is not going to rise until the preferred dividends are made current. There needs to be free cash flow to equity for the equity to be of any value.
Revenues are down. Since it's a percentage of revenue that you are using as a comparison, you might have to do the math and look deeper.
I don't think RES is in a hurry to convert Pref C. They first has to decide if they want to buy 3.75M shares at $1.6/sh. Then they have till 7/2015 to decide if they want to convert that $2M.
Without doubt, it is the capital raise option. If this company can buy back SPPRO (series B at 10%) then the savings is $800k annualized that goes toward common equity. Theoretically, common equity has no value so long as preferred dividends are held in arrears and there is no operational means that Supertel can generate enough money to buy back that series.
During the past 3 years, (revenue - operation cost)/((hotel value at beginning of the year + hotel value at end of the value)/2) is about 9-10%. The highest interest rate that SPPR is paying for its loans is 7.3% (the average is 6.4%). The actual damage is even worse, as there's hotel selling cost and SPPR typically didn't use all the proceeds to pay down the loans. So this is like selling $10M worth of hotels, which reduces the operating income by $1M and reduces the interests by $0.5M. The net effect is that the earning is cut by $0.5M.
The management is giving a different reason why they are selling. But I believe it's driven by the cash flow instead of anything else.
I can't help but feel that they are in a free fall that may lead to bankruptcy. It's been a long time since they made any profit.
The $2 million can wait until 2015 and carries a six month lockup. Rights exercise has no lockup and they can exercise up to 34% of the shares.
They can use the lockup shares to replenish any shares they sell for a profit as they go. The lockup gets laddered out.