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Cenveo Inc. Message Board

  • apgpp apgpp Nov 9, 2012 4:53 PM Flag


    What kind of fools do you take us for?
    Anyone think that CVO will get unsecured financing to repay the loans CVO cant afford to pay now? And even if they do, its just another loan that will need to be serviced. And I love his plan for the future:
    1) Sell the company (or parts)
    2) Take it private (really? pretty sure those PE folks are smarter than that)
    3) Do nothing and keep going

    Listing all possible options isnt a plan. It signals he has no idea, and is desperately hoping the solution presents itself. And saying that "fixing the 2013" maturity will cause a $2-$3 swing in the price of the stock? Please. No major institutions have any major investment in this company. Only way you get that movement is if a big boy comes in and buys. Only way they do that is to get wind of a PE buyout at a substantial premium. With a negative net value, good luck. Burton has to pay someone to buy the company right now.

    But I guess as long as they want to play house with each other and pretend that BOA or Cap 1 will magically rescue their business with credit card offers is fine. I still get 3 offers every couple days. The only reason Dodd-Frank exists (and I only mention it because Sonny mentioned it) and the only reason they had enough business to drop $40m in revenue is because credit card offers were borderline snake oil fraud. I wont get drawn into an argument on personal responsibility, but that volume aint coming back. Not in 2013. Not in 2016. Unsecured credit is the bubble no one is talking about outside bank boardrooms. Without unsecured credit, banks are all S&Ls, which btw make no money. Not sexy. Like the power company. Steady cash flow. The term bankers hours is and always will be true. Problem is, in order for banks to make money the old fashioned way, they have to lend high and borrow low. Well, next movement for rates is up kids. Banks will have to find ever more creative ways to make money, and none of its stable. With interest rates certain to rise, maybe banks will offer more credit. But who can repay credit cards with rates at 20%. 30%? Who wants to? Is that responsible citizenship...banking on the fact that banks will start offering unsecured credit to the cant afford it masses? Really?

    $40mil of lost revenue doesnt equal 10 mil of adjusted ebitda when its from low margin mass produced envelope business. Maybe it is...strip out this cost, add that line back, move R&M to capex. With magic like that its amazing he didnt blow the quarter out of the water. But he missed, for the first time in his illustrious career (suppposedly.) I get he has to be the cheerleader. But have your come to Jesus moment now, before the debt blows up. If the US can print money and still has its credit rating drop, what do you think S&P and Fitch etc will do when all they do is roll over the debt to a higher interest rate? Thats all they did this spring. The $300 didnt become $80. Its still $300. Just more expensive, later maturity $300. Lets not forget the current debt holders told them to pound sand, even with the so called premium.

    There is 100 times as much money in debt as in equity in the world market. The biggest, smartest, most respected money managers are involved in debt, not equity. Equity became a losing proposition decades ago. With inflation factored in, without dividends every stock since 1890 has lost purchasing power. Dont be fooled. There simply isnt enough reward for the risk. Its no longer investing in a company for its future. Its gambling with different rules FOR DIFFERENT PLAYERS. Burton buys companies and runs them because he knows that cash flow (salary) is way more valuable than stock. He uses his exorbitant salary to buy stock as a sham to parade in front of employees and analysts.

    And, assuming that debt holders will convert to equity is dumb. Why would they do that? Why not buy the stock at $1.94 and sell at $2.30 during one of its gyrations? No dividend, no reason for the increased risk. At least with the bond they can go to the bankrupcy court and get pennies...stock gets wiped out. But, it makes the multple lower, and since its a management ratio they can do what they want, reality or reason aside.

    And how many more senior exec jobs they gonna create while cutting OT and plant investment. Yippie. They are spending $20mil on capex for dozens of plants. so, if you are lucky enough, you get a few hundred thousand. All that does is allow for repairs to be capitalized and maybe spend $2mil moving some equipment. What a waste of time and resources.

    And blaming a miss on waste revenue? Jesus Mary and Joseph. Why, why, why would you put anything in the budget for waste revenue. They have to know the market has been tanking for over a year. Just set it to zero. Or almost zero. But you heard him. He insisted that they budget growth when everyone else was budgeting flat to down. I guess they are all fools and he is the only one with a brain.

    And I love the part about how the acquisitions started before they got there. Sounds like they are starting the "it aint all out fault" story pitch. Maybe, but Burton and Co exploded the debt to do it starting in 05. I submitted an analysis this past spring on that. Dont be fooled. They screwed this one up from day 1 and have been chasing it down ever since. 8 years later, no progress. Exit strategy is hail mary PE or CH11. Either way, stockholders and employees will get the shaft from this one. Cant imagine paying 1.5+bil for $700mm (maybe) in assets. As we say in NH, not even if Dan'l Webster himself walked into that courtroom.

    Good luck. G-d Speed.

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