<<That will allow the US poultry producers to export dark meat to Mexico.>>
Which reminds me of a story... Winston Churchill was at a buffet lunch and was in line in front of the hostess. He asks for some chicken, specifically some breast, at which point the hostess says "Mr Churchill, in this country we call that white meat." Churchill thanks her for the pointer. The next day the hostess receives a beautiful single rose and a thankyou note from Churchill, in which he suggests that she pin the rose on her white meat.
I have no idea what the catalyst will be to jump start the stock. I know one thing the market worries about that is the tarriff on import poultry products will disappear. That will allow the US poultry producers to export dark meat to Mexico.
However, it will also allow IBA to export white meat to the US (recently IBA published a news wire saying they're pursuing this opportunity).
And both Pilgrim's Pride and Tyson have large facilities in Mexico and I don't think they'd want to ruin their own business in Mexico by flooding the market with cheap dark meat.
Barrier of entry to this business is considerable (distribution system because the Mexicans like their chicken fresh, loyalty and trust of the wholesalers since they are not under any contract).
Radio Unica is a Miami based operator of spanish language radio stations in the USA. Radio Centro operates in and around Mexico City. UNCA has done nothing but burn through their cash since 1999: it's dwindled from $80mil to $10 mil, whereas RC has done nothing but generate significant excess cash flow with which they have paid dividends and bought back stock since 1999. UNCA appears dangerously over-leveraged with $150 mil. in net debt compared to EBITDA of negative $2.6 mil. last year. RC's net debt is less than 2x its EBITDA from last year (debt which was taken on solely to pay a large dividend, and has since been partially paid down). And RC has a long track record as the dominant player in its market, with an audience share north of 25% in its market since 1980. UNCA has no comparable advantage or track record. If UNCA becomes EBITDA positive this year, the stockholders may survive, but it is a very dangerous bet. The common shareholders could easily get wiped out. Unlike Radio Unica, RC's upside potential to fair value is huge without risking the prospect of a total loss if things don't go well over the next 12 months.
Do you have any insight to why the company decided to take out a $35 million loan and pay it out as dividend? From their 20 F, they had problems meeting the debt covenant in 2001 and had to request the bank for an amendment which resulted in higher cost debt.
And they have done several acquisitions which didn't pan out (To2.com and other radio stations).
And there is one station that they bought and then sold to the company's subsidiary at a loss.
Also, their audience market share is dwindling from 37% five years back to 31% as of end of 2002. I tried to look up RC's competitors financial but I guess they're not public (Grupo Acir, nucleo radiomill, or radiopolis).
Which one of these competitors are taking market share from Grupo Radio?