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Compass Diversified Holdings Message Board

  • stockmaster2002 stockmaster2002 Mar 18, 2011 10:57 AM Flag

    Reason for drop -- Heading to $10

    Here is the reason for the drop. Should go lower now. This article just came across on Google Finance today. The info was in the 10-K but main street is just reading the info.

    http://www.furnituretoday.com/...

    CODI had to invest an addition 50 million into American furniture and only picked up an addition 7% ownership. Not a great move for a company with only $136 million in sales on the decline.

    I will pick some up under $10.

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    • 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.

      • 2 Replies to M_Grice
      • 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-

    • bogus link.

      pfft

    • 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.

 
CODI
17.85-0.02(-0.11%)Jul 29 4:02 PMEDT

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