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SHFL entertainment, AŞ Message Board

  • pjv2xyw9dww4b5 pjv2xyw9dww4b5 Mar 5, 2007 2:27 AM Flag

    Stargames--worst case?

    http://sec.gov/Archives/edgar/data/718789/000110465907002760/a07-1791_110ka.htm
    35,024,433 shares outstanding on Jan. 12, 2007

    Note 2 ( http://sec.gov/Archives/edgar/data/718789/000110465907002760/a07-1791_110ka.htm#ShuffleMasterInc_NotesToConsolida_192053 )
    Stargames total purchase price: $116,358,000

    That's $3.32220 per share. If the Stargames acquisition were a complete, total waste of money, the one-time loss would be $3.32220 per share. Someone interested in taking over SHFL might simply say, "OK, lower the price per share we were planning to offer by $3.32220."

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    • Stargames costs can be broken down into 2 components.Direct costs and indirect costs.

      Shfl paid diret costs of about $107M for stargames, and about $9m in indirect cost[ i.e. legal fees, loan fees etc.] for a total as of Feb/2006 of about $116M.

      Since Feb 2006, Staregames has cost Shfl further multi tens of millions for the following":

      1 ]At least $24M loss for the forced sale of the RDIF patents for the fire sale price of $16M it IGT. These patents were worth at least $40M.Shfl was forced to sell these patents to pay down part of the bridge loan or face foreclosure of the loan.

      2 ]Interest on $70M balance of bridge loan at about 8% = $5.6M.

      3 ]Loses from Stargames operations at 59 cents a share for
      2006 = $20.65M

      4 ] Legal fees, bank fees, points,and closing costs, and Shfl over head costs on the $100M line of credit need to pay off the bridge loan.Estimated $3.4M.

      These indirect costs total about an additional $54M making the cost of Staregames to date of $170M

      Additionally,Stargames continues to lose money.Accordingly, it is reasonable to add at least another $5M for Q1 for Stargames loses.

      Therefore, the indirect costs for Stargames total $59M making the total cost of Stargames about $175M [ i.e $116M + $59M] or $5 a share.

      Recognizing that Shfl is only worth about $3.75 a share on a value basis from the balance sheet, brings into very sharp focus the horiffic mistake in buying Stargames.

    • "That's $3.32220 per share. If the Stargames acquisition were a complete, total waste of money, the one-time loss would be $3.32220 per share."

      Good Lord you really didn't think Wall Street would use basic math for that calculation did you....I think we all share the same opinion......no one can believe you even said that!

      "Someone interested in taking over SHFL might simply say, "OK, lower the price per share we were planning to offer by $3.32220.""

      LOL.....or they could say bend over and grab your ankle's?

      Soule

    • Someone else (Yoselloft evidently did) might say "Stargames was supposed to ADD x dollars to pps. Therefore subtract pj's 3.whatever AND subtract whatever Stargames was supposed to add.

      Someone else may have said subtract pj's # from $40 pps and therefore shfl was a logical buy at just under $ 37.

      Answer this (only relevant) question, pj. What will the market think a reasonable price 6 months from now ? Doesn't matter what happened yesterday.

      tia

      • 1 Reply to corticalchatter
      • corticalchatter,
        I've never understood SHFL. The market dealt me--probably from a Shuffle Master shuffler!--a well-deserved, sudden loss in it: buy 600 at $25.05, sell 588 of them in a panic between $20 and $21 after the warning! That's what happens when I mess around with a stock about which I have doubt and confusion. (Unfortunately, it also happens too often with stocks about which I do not but probably should have doubt and confusion.) I kept 12 shares as a souvenir and an admission ticket to annual meetings, which are not inconveniently located for me. SHFL's price in six months? I have no idea, but with 12 shares I'll lose no sleep over it.