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Diamond Foods, Inc. Message Board

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  • peristentone peristentone May 2, 2012 4:43 PM Flag

    Where did all the cash go?

    pddnap52 thanks for some quality posts and for your publishing sections of forebearance agreement.

    Let's look at this thing from 20K foot view. First, what is the sustainable EBITDA going forward, given diminished spend for marketing? Are we at $100M? Trying to put together a conservative case here...not claiming this is a true number.

    Second, what kind of Debt to EBITDA ratio will the banks tolerate? Maybe 3x? So that means they will allow $300M debt versus the $531M reported by Yahoo today? So we need to raise $250M equity, pay $231M to banks and use the rest for working capital. Do you see a different number for the raise?

    So we raise $250M worst case by equity alone, and that flattens the price of the stock considerably. But once that is done aren't we largely out of the woods?

    Third, regarding lawsuits, let's assume that they didn't falsify numbers, but just moved recognition of expenses to the wrong time periods. How much do you think they spend to make the existing suits go away? I guess we need to add that amount to the capital raise.

    I guess the point of this exercise is to show there is a liquidity issue here, but probably not a liquidity crisis. If they act to raise the money quickly enough, there is sufficient market cap to get them out of this situation. A private equity investor is going to want better terms than equity raise alone I think.

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    • look, if you borrow $1000 to buy a used
      car on your credit card, then build that
      car up to be worth $1500, you are up $400
      even if you spent $100 doing it.

      That is where DMND is with Kettle.
      another example of why I insist they
      need a transaction to unlock value.
      but hey, that's up to them to figure out.

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