The next paragraph shows what the 10K actually says about this(pg 107). They clearly didn't spend $50 million just for an adiitional 7% ownership but nice try at bashing this down. Also American Furniture only had $136 million in net sales out of $1.6 billion in total net sales for all of CODI. AMF alone can't bring this down to $10. AMF also would have had a positive income from operations of over $1 million if not for the impairment charge.
On December 30, 2010, we entered into an amendment to our inter-company loan agreement with American Furniture wherein we contributed $50.7 million in additional equity contributions in exchange for the following: • $1.0 million in unpaid M=management fees;
• $35.5 million in outstanding term loans; and
• $14.2 million in outstanding revolving loans.
As a result of this transaction, our ownership percentage of the outstanding common stock of American Furniture increased to approximately 99.9% on a primary basis and 91.4% on a fully diluted basis.
You are missing the point, when CODI gave the 50 million- they did not give it to a selling shareholder they gave it to American Furnitutre. When they gave it to American Furniture, AMF was only worth $60 million. Now (after the extra 50 mil) it is worth $110 million. so CODI had 85% of 60mil (51 mil) now they have 92% of 110mil (101 mil) = no dilution.
What they did with the money is another point but a good one to consider. AMF cash flowed 1 mil before- now after paying off 50 million in debt that was negativly impacting earnings by 4 million. it should cashflow 5 million. so CODI had 85% of 1 million in CAD, now they get 92% of 5mil in CAD. It also cleans up AMF to be divested-
I dont think you will see a price of $10 anytime soon.They just raised the distribution so i dont think the furniture company creates a serious problem for codi.The other company interests are doing quite well.