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坦迪時裝配飾公司 Message Board

  • longtimefollower longtimefollower Mar 3, 2013 12:00 PM Flag

    Swank (SNKI) was bought out at .4x sales and 1.5x book

    That was one year ago. But look at the Swank balance sheet and income statement. It had NO debt to speak of, and it was also materially profitable the prior few years, earning a 10%+ ROE.

    Meanwhile, TBAC has pretty much lost money for each of the last 5 years, and the balance sheet is looking worse and worse. So no one is willing to pay for TBAC what they were willing to pay for SNKI.

    I'm guessing what they MIGHT be willing to pay, in a best case scenario, is .2x sales, after backing out the value of the debt. On a price/book basis, considering the distressed scenario, and the debt, I think you might be looking at 1/2 of an adjusted (for anticipated losses in the quarter to be reported) book of $2.75. That gives you a roughly estimated value per common share of maybe between 50 cents and $1.35, were the company to actually be able to find a buyer....outside of bankruptcy court. It's basically a game of chicken. Everyone knows the company is desperate; therefore, the kind of bids you would like to see go down accordingly. It's certainly possible a buyer could be found, but it's also possible the company could do a dilutive pipe, and issue 10 million shares at, say, 50 cents....increasing the shares outstanding by 150%.

    The company is in trouble, and it seems clear to me that much of how this resolves will be dependent on just how much inventory liquidiating they can do, to meet their liquidity needs, and just how much of a hit the income statement and balance sheet is going to take from such activity. In the meantime, I think the proper trading range for the common stock is 50-65 cents. And, since holders of TBAC are, in the main, deep value investors, deep value investors do NOT like to hold stocks where there is, very suddenly, a much higher risk of a "wipeout" scenario.

    Even if the company manages to come up with the liquidity, we have to get through the next 2 seasonally weak quarters, which will involve MORE losses.

    Sentiment: Sell