What they didn't mention is that we probably agreed
to give Bank of America $10,000,000.00 worth of envelopes per year for free for the next three years. Great work Bob, now you can afford his $9,000,000.00 per year compensation plan again. Barf! You know that he would have never gotten this money if he didn't take a huge pay cut. These investment guys were all over that #$%$!
Mentions favorable changes to the loan covenants. Sounds like he is going to take us private. Why not, market cap is only about $130,000,000.00. Almost $100,000,000.00 less than he paid for Commercial Envelope, too funny. I can't wait to see the fine print on these terms. I hope B of A has ample loan loss provisions. Bologna Boy won't even see 2020, he will explode by then.
All they did was free up cash to pay Macquarie enough to maybe hit the loan reduction targets to keep that loan from costing 25%. Nice job on the revolver...really. But we spent $114mil on interest in 2012. I doubt this will really impact cash positively. You are right Web, the $6mil in pay cut probably did help. Lets keep our eyes on the stock awards this year more closely. Bobby wont give us 7 figures for nothing. I thought after the last refinancing they were going to pretend to getting back to managing a business? I guess this time they mean it.
Remember, based on the amortization schedule on the Macquarie deal, they were gonna be $2.1mil short of the 1st principal target. Bobby's pay cut, if it was effective 1/1, just squeaks us by IF they send an extra check with the 5/25 payment. But by 8/25, they have to send another 4.1mil check IN ADDITION to the regular interest check. So, 2.1 + 4.1 = 6.2. Bobby's haircut isnt enough. If other execs took a reduction great. They will need to send $4mil checks every 3 months to stay on track to avoid the 25% rate. Still paying 15%. Not favorable. All the other lenders saw the writing; either refinance or risk writing off millions in next couple years. Can't wait to see the actual interest expense each quarter. Will be a real hoot. And on the risk of loan loss, notice that the ABL has 5 seperate banks. No one taking all the risk.
Lets see what strategic alternatives they have now that they have another $200mil loan to screw up. 2% of $200mil is $4mil. Lets see how fast and deep they dip into that...and how long and real this compensation reduction lasts. It will be funny to see how quickly his expense account grows.
Whats really great about the Macquarie deal is that at 15% the interest payment is $3.9mil. At 25% the interest payment is $4.7mil. If you multiply the different by 3, you get roughly the additional principal needed to avoid the "penalty". They get it either way. Of course they signed on for the refi. $6mil 5/25.