it has entered into agreements with certain of its landlords for rent reductions. In return, the Company has issued or agreed to issue five-year warrants to purchase the Company's common stock to such landlords
GC has officially suspended development. They laid-off their development department. I believe they were obligated to do this as a result of their rent abatement package with the various Landlords. The 12 to 24 months of no new stores sounds about right.
Seems like you made a great trade. Honestly, I think the company needs to revisit the short - mid-term unit growth strategy. Based on the financials they provide it seem like there is a good portion of resources/cost devoted to supporting expansion plans. In this type of economic environment is this the right strategy given the shortcomings of their balance sheet. Personally, I think all expansion plans should be put on hold for 12-24 months reduce the near term cash outlay to start to build up the company's cash position. Doing this, plus the lease renegotiations and typically improvement in operating profile from year 0 to year 1 and you have a company which is generating several million in cash on an annual basis.
They also need to start looking at some of their assets in a different way. The company has a great beer product. Can these brands be exploited in a retail format? Finding a partner to produce and distribute product would help brand recognition for the casual dining outlets.
Obviously, I'm long the stock because I believe there is potential here. The 100k shares I own shows I'm also willing to put my money behind the concepts.
I wish management would starting giving the same confidence to investors. At these deflated level a $20k investment in the open markets by 3-4 individuals in management could really increase confidence..
Actually, I closed the position today. The stock is still going to zero, but I had 23K shares short and it each ties up $2.50 in collateral. Three was no risk at 24 cents at any other price. Price is just a scalar. If the company were to do a 1-10 reverse split, the stock would be 2.40? Would that be less risky? But, after the recent debt agreement, it appears that the management wants to keep this dead animal alive while praying for miracles. I shorted over a buck, so I did just fine, but I do not want to tie up the collateral for another year while this company dies a slow death.
Didn't realize the debt is also convertible to equity with a .5 strike. I'm starting to like the deal even more. Obvious the bank felt the stock has a good chance of appreciating in the next 12 months by at least 100% from today's level.
I'll look for article but, in the The Nation's Restaurant News there was an article that mentioned GCFB and the Landlord re-negotiated the leases that I believe will add $4mm in cash flow in 2010 and something like $7mm in 2011 & 2012.