1. I would reduce the staff of eighteen to four employees. Why does SPPR need eighteen employees when all hotel management is subcontracted?
2. I would not borrow $2M for an unknown purpose at an unknown interest rate. Why borrow $2M when SPPR can save $2M expenses in a year through cost reductions? Cash should already be accumulating from not paying the dividend. $2M? What can you do with $2M? Why bother? So much legal fee, SEC reporting all overhead cost cost cost.
3. A Sneaky Pete could buy up the common for 2 bucks a share * 2M shares = $4M then borrow every nickel the company could second mortgage and pay up the preferred arrears dividends then pay every nickel left as a one time common dividend never to pay a preferred dividend again, all the while collecting a fat paycheck as a self appointed Chairman of the Board. Beware!
4. As a legitimate manager I would use the cash flow to pay off the highest cost debt or buy back preferred. I do not know if a company can buy preferred with the dividends in arrears but I would ask the Company's legal council.
5. Keep selling hotels when SPPR can get a good price.
6. Since I do not understand the company's strategy for growth and profitability I would focus on the most profitable liquidation. Do not buy any new hotels. The management SPPR pays should communicate a coherent strategy.
7. Prepare a good presentation and keep looking for the right buyer for the company at a favorable price.
SPPR is top heavy in management and definitely did not need a COO. They needed to cut.,, eddiegbay is spot on in his assessment. they need to become geographical in 2-3 areas only. Difficult to say whether economy motels can make it. They are competing against too many Pakistan/Indian owners who charge cheap and provide nothing in amenities....
They could save a lot more by cutting some unnecessary overhead, namely staff at corporate headquarters. The fact that they have hired superfluous staff including a corporate communications person a coo indicate that they do not have shareholders interests at heart. It should NOT be that hard to run a few motels especially when the day to day management is farmed out to management companies. Ridiculous and very happy I unloaded all common a long time ago. I keep thinking the assets are more valuable than indicated by stock price but with this bunch in charge shareholders will NEVER realize the hidden value in the motel assets.
There are probably not going to be any explanations that would give me enough confidence in the management and the board. It is my opinion that changes in both need to occur. Some new faces with a track record of turnarounds would be welcome.
Vote against every nominee for the board the next time that comes up. It is not binding. However, it will send a message if there are enough nay votes. But then there is the issue of whether they would care.
As a protest, I will vote against the board of directors and increasing compensation pacages the next time I get a ballot. The result is meaningless as they control what is on the ballot.
I expect the 2013 annual results to be published this month. I expect to hear some clear straight forward explanations from management what they are going to do about the common stock crashing from $6.00 on Oct 28, 2013 to $1.65 on Jan 31, 2014. Not to mention the preferred crashing 40%. The shareholders have taken quite a beating. Management --- what are you going to do to improve this situation? What is this $2M loan all about? Explain exactly why this loan is needed after cash was conserved by eliminating the preferred dividend. What is management doing to reduce costs? Now more cash wasted restating Q3 discontinued operations. Arrrrrg!
Management who owns 23% of the common stock should vote against themselves because when the stock dropped from $6 a share to $1.50 they lost $3.5M of $14M lost. Management was the biggest group common stock loser on the SPPR stock crash! ---- but more, $15M to $19M was lost on the preferred.
I think once they are delisted and pinksheeted, the Latin American investor may come in and close out the public shell by tendering for the company. It would not be expensive if in a year the reflected price is 10 cents or something on the pink sheets. Then they shed all the public company costs, like the audit, filing, compliance, investor relations, legal, Sarbanes Oxley, etc. by doing that they cut payrolls and costs. Then just sell these assets off one by one and try to get their capital back.
I understand the percentage. However, large institutional investors and mutual funds can often impact the price of the stock and it's management just by being who they are. The endlessly weak market argument can be a crutch along with the excuse of the government shut down. Other REITs still pay fdividends for preferred and common stock albeit many of those dividends are small. Other REITs do not have a reverse split. Time for a change. Pay for performance. If things do not improve then there should be management and board changes,
SPPR total revenue=$63.8M, HT=$346.9M
SPPR employees=18, HT=46
SPPR revenue per employee=$3.5M, HT=$7.54M
SPPR earning per share (9/13)=$-3.21, HT=$0.04
SPPR dividend=0%, HT=4.36%
Bottom line is the bottom line. Would like a better explanation from SPPR management about "strategic" planning and bench marks to assess how well strategic goals are being met.
Not going to happen.
Assets are not great.
I hope it does, but I will not hold my breath.
I am not sure Management is looking out for us shareholders, but instead there pay.
There is no place to go. No options. This company traded at 67 a share before the recession. They overpaid for fundamentally bad assets and now the long wait is over. They cannot raise equity, cannot raise preferred, cannot raise debt. They cannot sell more assets...that is just self liquidation...a shrinking balance sheet is not a strategic turn around. All the options are over. I am surprised their lenders have not come at them with a MAC event and foreclosed on their hotels. They will get delisted. They have less than 6M in market cap. There will be one last gasp and this stock will go under $1.00 and then someone might buy the shell, but as long as the preferred holders have any say so, then even that might not happen......
They had a chance several years ago to raise equity when the price was better and there was still some glimmer of hope, but for whatever reason, the Board felt that the dilution was just too much and certainly they could come up with a better solution, I guess because they think they are so smart. Now all those Directors who held stock and thought they could make 1+1= 3 got reversed and now their stock is down 99%. That is what happens when managers and BODs ignore financial reality. The wait has been long, but this was preordained 6-8 years ago.
Wow! 1.3M common stock shares have been transacted in the past 4 days out of 2.9M outstanding.
Zacks dropped coverage on 1/24;Thomas Reuters downgraded SPPR yesterday from hold to sell; stock doubles in price in past few days. Now an unsubstaniated buyout rumor. They do have a debt problem to solve this quarter - can they make it? No insider or institutional buying (or selling). Interesting, huh?
Summary of events:
1) No cash flow
2) Further asset write downs in 4Q; those aren't done yet.
3) No revenue growth; long term structural decline in economy hotels
4) Marginal decline in G&A expense; management continues to stay the same despite shrinking portfolio of hotels
5) Possible default later this year with GE capital
6) Cash flow from Continued operations portfolio insufficient to meet CapEx; even what they want to own does not pay its way.
This is it. If by a miracle they have revenue growth, it needs to be greater than 5% with complimenting increases in property operating margins to 25% or better and at least $300k decline in G&A.
What happens next:
1) asset sales raise liquidity; consequently, management decides to not cut G&A
2) FCF does not suffice capital expenditures thus more asset sales are needed
3) Assuming SPPR survives into 2015, interest rates increasing squashes asset values for their ongoing dispositions and raises borrowing costs too high to refinance future maturities.
4) game over.
This could be avoided, but we don't have the board or management actively focusing on changing this thing in a way that gets them out of their comfort zone.
At $1.58 per share, that would mean less than 20 cents per share if you still had the smae number of shares before the reverse split. The board and mananagement may be well meaning but I keep going back to my previous suggestions to not vote for them again, bring in a turn around specialist, and look at pay packages and number of jobs that may not be critical at this time. Also, look at the performance of those managing the properties.