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Dixon Ticonderoga Company (DXT) Message Board

  • zebraspit zebraspit Aug 15, 2001 4:56 AM Flag

    DJ Newswire:

    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.

    -Pamela Tate; Dow Jones Newswires; 201-938-5400

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    • I'm not too worried.

      The company is no longer losing money.

      Interest rates are low, the balance sheet isn't too bad, and money is not too tight, so I'm guessing that a deal can be worked out with the lenders. A simple minded answer... or opinion I should say.

      • 1 Reply to rbianco
      • 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!"