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Compass Diversified Holdings Message Board

  • luktrot luktrot May 6, 2009 4:12 PM Flag

    Bad Codi News?

    Read this about CODI:
    http://biz.yahoo.com/e/090506/codi8-k.html
    Does a conversion of Staffmark/CBS debt to equity mean that Staffmark/CBS can no longer pay its debt to CODI? Such conversions of debt to equity often occur during bankruptcy. I'm not sure in this case, but could it mean that Staffmark/CBS will not be providing a sustainable income stream to CODI anymore or at least less of one and that could mean a cut in CODI's dividend? Anyone have thoughts on this?

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    • I read the link. It is certainly not good news nor is it a large caliber munition dropped on our foxhole. I presume class D shares are preferreds? Regardless, as is pointed out by another poster, we have a less secure position.
      I think we will do ok and will grant management some leeway as long as I feel they are being careful with my investment and not seeking to be on Forbes' front page.
      Thank you for the link. I had not seen this filing.

      Roger

    • I read the SEC filing and then went back to review the 10k to see if it shed any light on what this might be. Frankly, I can't figure it out, other than what it says, debt to equity with the equity being preferred shares with a $6 par value. Looks like CODI's $35m loan to Staffmark is a little less "secure" now. Maybe this is part of the projected "loss" for CODI this quarter? I've been waiting for the price to drop below $8 to buy some more. I guess we'll find out the answer Friday unless someone with more experience can shed light on this. (A $.05 loss x 31m shares = $15m.)

 
CODI
18.10+0.24(+1.34%)Aug 21 4:02 PMEDT

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