Anyone concerned at all about the loan covenant non-compliance?
Dow Jones Newswires -- August 14, 2001 Dow Jones Newswires
Dixon Ticonderoga 3Q Pro Forma Net 54c/Shr
Dixon Ticonderoga Co. - Heathrow, Fla. 3rd Quar June 30: 2001 2000 Revenues $31,409,776 $33,389,698 Net income a 1,416,412 1,514,709 Avg shrs (basic) 3,174,324 3,164,461 Shr earns (basic) Net income a .45 .48 9 Months: Revenues 72,086,777 75,407,134 Net income b 425,884 (231,817) Avg shrs (basic) 3,169,616 3,213,458 Shr earns (basic) Net income b .13 (.07)
Figures in parentheses are losses.
a. Excluding restructuring costs, third quarter earnings were $1.7 million, or 54 cents a share.
b. Excluding restructuring costs and a $1.2 million gain on asset sales, nine-months earnings were $177,048, or 6 cents a share.
As of the third quarter's end, Dixon Ticonderoga Co. (DXT) wasn't in compliance with a required financial ratio in its senior debt agreements, but the company has obtained a waiver through Sept. 15.
Dixon Ticonderoga said its senior lenders may block the payment of $5.5 million in principal due to senior subordinated noteholders on Sept. 27, unless the parties extend the waiver or renegotiate terms. The company said it has sufficient funds to make the payments, if allowed.
The company was in violation of certain covenants under its $42.5 million loan and security agreements at the end of the fiscal second quarter, on March 31, but lenders agreed to amend financial ratio requirements through Sept. 30.
American Stock Exchange-listed shares recently traded at $3.90, up 20 cents, or 5.4%, on composite volume of 8,200 shares. Average daily volume is 2,833 shares.
I am mildly concerned about the loan covenant and the current liabilities [due to reclassification of long term debt as current liabilities].
Of course, this could mean "NO PROBLEM", if DXT is about to be taken over. The acquirer will solve the problem. As to bankers hesitating to make loans, I think they would be FOOLS to NOT ROLLOVER debt to longer maturities! One must ask, "Are the financial consultants MORONS?" Those consultants should be able to arrange financing. Further, in view of current low interest rates, it is a substantial insult to be charging higher rates.
In my view, the solution is to find another lender. In my view, this financing is not that risky! Someone like Ted Turner might solve the problem with "PETTY CASH."
I think the answer is that to an extent we are awaiting the TENDER OFFER. But, we have a game of CHICKEN! The offer could be influenced by the current financial condition, so waiting may be a TACTIC - a foolish one. If the financial ratios cause a fall in the stock [as down to $2 or $3], the the SNAPER may be someone else. Someone other than the OFFEROR in THE WINGS may step in and SNAP AWAY the deal.
On the other hand, the broad market has come to a DECISION POINT. If the formation breaks on the downside, the OFFEROR may say, "Forget it!" In that case, people may be selling APPLES and PENCILS in the streets.
DXT has good brands. But, people will go for cheap - if money gets hard to get.
It will HURT, but I think it might be good to have some pain and go down BIG TIME! I am tired of kids paying BIG BIG bucks for college. Some general humiliation may be GOOD. If so, I will cry with them.
Attention, Greenspan, "If we go down BIG TIME, you go BYE BYE! Better start making funeral arrangements! You DAY IS PERHAPS OVER!"