Dixon Ticonderoga Company (DXT) Message Board

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  • pmcmurrell pmcmurrell • Oct 24, 2001 3:51 PM Flag

    sell opportunity

    This company owns a refractories division, and it is among the low cost providers. Further, the Mexican subsidiary is about 90% owns and trades on the Bolsa. The value of these assets is substantial.
    The book value per share is almost $9 - and $2 is a long way off of book value.
    This company is a substantial value to another buyer.
    While the relationship with First Union is friendly, what they really need is some of that low, low interest rate money. The right buyer could FREE THEM FROM FIRST UNION!
    A tender offer at $5 per share by a "big pockets" type such as Karl Icahn should precipitate an immediate higher offer by someone else.
    The refractories division can be sold. The chief problem is that previous activities left the company with too much debt in view of the resulting ECONOMY [unexpected]. The company needs to refinance at substantially lower rates. It is to the advantage of First Union to basically do nothing except roll over loans at good rates for them. The have DXT as a temporary captive.
    What will unlock value? Very simply, a tender offer - even one not really expected to be accepted.
    How a speculator with handy cash can profit: Buy all the stock you can up to about $4. Then , when 5% of the company is obtained, make a tender offer at $4.40/share. That will precipitate action by those awaiting in the wings. You can then unload shares purchased near $2 for 100% profit.
    Don't be overly skeptical! This deal is GOING TO HAPPEN. It is rare that situations like this actually exist!

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    • zxcvbn44113 zxcvbn44113 • Oct 26, 2001 8:20 AM Flag

      They may be the low cost producer in the refractory, but their assets are old. This provides their cashflow for other continuing operations. Read the financials and figure out where they get their cash to fund operations.

      As for the Mexican operations, look at the debt they have acquired. Not getting the bang for the buck. If you use Mexico for production, you may get the low labor, but, you still need to produce quality.

      By the way, antitrust will not allow Hallmark to buy this company. They already own a significant portion and then would be owning the second largest? I don't think so.

      If you have shares, hold on. If you think of buying, be ready to wait for the long haul. The savior is not going to come around for a long time. If you want to risk it, why not. A lot of potential money here.

      • 1 Reply to zxcvbn44113
      • pmcmurrell pmcmurrell • Oct 26, 2001 12:17 PM Flag

        Old assets in refractories are GOOD ASSETS.

        Keep in mind that Acme Metals [formerly Interlake Steel] had old assets and opted to modernize. They modernized right out of business. So, best thing is to refine, not replace!

        I think Hallmark could buy it out. There are lots of other private pencil and crayon companies. DXT is not really very large, and some of the products are different. Really, DXT is less than 10% of Hallmark. I don't think Antitrust would come into play or be enforced [if it could come to bear on the matter].

        Some of the chiefs at Hallmark could buy DXT with "pocket change."

        As I said, all that a third party [not an insider] needs to do is buy 5% and sell on the announcement. It will fly to $3 or $4.

        The company could be a cool deal! After all, it is about the oldest public company in America.

        How a man could make BIG BUCKS! Study the assets carefully and evaluate the refractories divisioin. Visit some people who might be interested and get an option to sell it to them at a good price. Buy a lot of DXT shares and make a tender offer at $4.50. If you get it, then exercise the option and immediately sell the refractories div. Use the money to help pay for the company.

        If you don't get it, because someone outbids. Sell the DXT to them and don't exercise the option.