I don't have much additional to say. The agreement is good news, plain and simple, especially considering they did not need to pledge all of their collateral towards it, but left out property overseas (which would allow potential additional financing transaction there). In a market environment like today, the Street isn't going to care...but sometimes the Street is stupid in valuing the relative risk of a stock...and I remain as convinced as ever that valuing HTCH at a post 08/09 crash low, at $2, when it's fortunes have dramatically improved, on both an operating, and a financial strength basis, is just plain wrong. I still think this stock should be at $4-5...and not $2, right now, for the "financial runway" they have built, for its expected return to positive cash flow and profitability...and enormous turnaround potential. But I guess I'll just have to be patient.
The stock remains on super strong buy, a very "elite" status given very rarely by be to very select securities. HTCH is a sleeping giant.
My take would be, yes. PNC has presumably done their due diligence and determined that the risks are appropriate, which means that PNC believes there is a pretty good chance that HTI is not going to be going under. I also find the terms of the agreement interesting. At the close of last qtr HTI had 76.2M of outstanding 3.25% convertible bonds. The terms of the credit facility state that it becomes due in October 2012 unless HTI reduces the amount of the 3.25% convertible bonds to 50M or less and has at least 50M in cash, in which case the credit facility becomes due in October 2014. Assuming that HTI intends to keep the credit facility beyond 2012, I am intrigued by what they intend to do regarding the reduction of the outstanding 3.25% bonds. On the one hand, they could be looking at another swap or maybe, just maybe, they actually think they are going to be generating enough cash to allow them to retire 26.2M of the 3.25% bonds by this time next year.
Unifi, u seem to really have a grasp on this, so, how does this tie in with the previous refi they offered. Seems to me they are expanding their liquidity or am I reading this wrong? I am assuming they had a good quarter which they have not yet reported with good cash flow (obviously amount unknown).
I think, possibly, the $50 million "liquidity" figure includes both cash and available credit, so I think they could meet this standard even with today's balance sheet, if I read it correctly. It would be nice to see them book some more gains on more repurchases of the notes with this cash, since the notes will be put on them anyway. The market price of the notes seems like a gift horse for the company, so some of those gains should be inevitable with this agreement in place.