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Entravision Communications Corporation Message Board

  • stanley31gogit stanley31gogit May 8, 2010 10:10 AM Flag

    Chronic bad timing- for some

    In the 2007 10K the Company stated that as of December 31, 2007 it had repurchased 8.4 million shares at an average price of $8.29 for $69.4million. It should also be noted that an insider was a prolific seller of stock all through 2007. Very bad timing for the Company but great timing for the insider. There has been a window this year to issue CD and pay off the BD albatross. That window is closing fast. More bad timing. In between there have been other episodes of bad timing. There was the matter last year of the Unnivision stock that the Company could have purchased for chump change. They pay themselves well and they have great benefits. The decision-making that affects all shareholders equally is in question. Outside shareholders cannot issue themselves options or give themselves raises.

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    • Now you are getting it.

      So as stated on the call the total cost of debt (finance interest plus swap costs) will be in the 6's (up to 7 if they fix a higher percentage of debt).

      Far less than the blended 10+ percent they pay today.

      And they don't have to refi debt to get there. Its like our tax increases in 2011 - it'll happen by default.

      If vastly improving operating performance lets them refi at 5% then all the better. But since the 6% range is only a few months off there is no reason for EVC to pay millions now to refi and lock in 6's just a few months earlier than will otherwise occur without any refi costs...

    • We use interest rate swap agreements to manage our exposure to the risks associated with changes in interest rates. We do not enter into derivative instruments for speculation or trading purposes. As of December 31, 2009, we had three interest rate swap agreements with a $168 million aggregate notional amount, with quarterly reductions, that expire on October 1, 2010, and a fourth interest rate swap agreement with a $193.9 million notional amount, with quarterly increases, that also expires on October 1, 2010. The three interest rate swap agreements convert a portion of the variable rate term loan into a fixed rate obligation of 9.71%, which includes a margin of 5.25%. The fourth interest rate swap agreement converts a portion of the variable rate term loan into a fixed rate obligation of 10.31%, which includes a margin of 5.25%. It is expected that the term loan amount will not exceed the notional amount of the four interest rate swap agreements. As of December 31, 2009 and 2008, these interest rate swap agreements were not designated for hedge accounting treatment, and as a result, changes in their fair values were reflected currently in earnings.

    • Listen again. 50% of the debt must have a swap to fix the interest rate per EVC's loan agreements. The 50% fixed debt is slightly more expensive (cost of the swap) than the half that is floating and mgmt was taking the cost of a swap into account when explaining a total EVC interest rate in the 6's, or possibly 7% if they decided to fix the entire amount using swaps.

      The low interest rate they were talking about for later this year is an all in blended interest rate including swaps and is exactly comparable to today's 10%+ rate.

      I am not saying they won't surprise us with a re-fi tomorrow. But even if they do nothing they will end up with a good rate in some months.

    • Only 50% of the debt will be affected in October. The remaining half stays at 10.10%<<<< at least that is the way I heard it.

    • I stand corrected. Thanks for setting me straight. Story is better.

    • As they explanied in the conf call there is no justification to incur the cost of a re-fi since their borrowing cost will soon drop to around 6% the from 10% today, by doing nothing, expending nothing. So why pay for a refi now? Why not wait until their interest cost declines per current terms? Why not wait for the excellent operating improvement of the next few quarters to be reported before going out for a sub 6% refi?

      EVC mgmt is decisive and intelligent and you are simply trying to get in for less.

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