Investors should prepare for guidance well below analyst consensus accordingly.
The brokerage business was quite strong during Q1, but advertising was very weak and actually the biggest disappointment were the heavily touted "revenues from financial information and advisory business", down almost 50% qoq. Given that this business is actually expected to be the company's future growth driver, the numbers look heavily disappointing.
Nevertheless the company is currently valued just slight above cash levels and remains solidly profitable so the downside should be very limited at current price levels.
Actually it would need more than $610 mln in expected proceeds from the wind down of the company for shareholders to vote "no" here.
The current term sheet will provide them with up to $1.525 in recoveries or $30.5 mln dollar.
A "no" vote would instate the entire $579 mln senior lenders claim which needs to be recovered first before any payments can be made to the shareholders. Add the $30.5 mln shareholders would have gotten more easily under the current term sheet and you are at $610 mln before a "no" vote might turn into a profitable bet.
Actually the true number is $579 mln as it contains the "applicable premium" set forth in the original credit agreement in case the debt gets accelerated. The $510 mln number only applies when the shareholders vote in support of the deal - which they should and they will as otherwise their chances for a recovery would be virtually zero.
27% of the company's shares are actually held by the senior lenders anyway which should pretty much ensure a positive outcome of the vote as according to experience only a small minority of the equityholders will indeed cast their votes with rest simply doing nothing.
The numbers are quite weak actually, income from operations was down more than 80% compared to Q3. Gross margins were down, while sales and marketing expenses were up significantly.
More than 80% of the company's revenues are still derived from its brokerage business.
The company is changing its entire business model with the potential success unclear at this point. Guidance looks too optimistic. Assuming improvements in H2 looks pretty far fetched at this point.
Cash is up $53 mln from Q3, but cash flow profited from a $14 mln increase in accounts payable qoq. Accounts receivable was also down by $20 mln qoq but some of that amount was due to even more bad debt provisions.
So they got the Nation Sky payment and some additional help from working capital but still the increase in cash was lower than the Nation Sky purchase price...
Obviously you haven't passed that test.
The press release warns of liquidity constraints due to the MGF dispute so they have obviously tripped the Sycamore debt covenants already with Sycamore being able to accelerate the debt now.
Nobody would pay $150 mln plus $200 mln to shareholders in exchange for $100 mln in annual losses. The company lost more than $85 mln in cash last year.
This is an easy bet and Mr. Market is well aware of the situation given the share price in after hours. Smart move by Sycamore.
You don't get it. Sycamore is the company's sole long-term creditor. With the help of fully controlled MGF Sourcing they now created a situation for ARO to default on the credit line provided by Sycamore two years ago. ARO will have to file for bankruptcy and Sycamore will get the company without paying shareholders anything.
No. They are going to default on the Sycamore term loan actually and will have to file for bankruptcy. Nobody is paying cash for a company losing $100 mln + each year. Sycamore will take control then as they are the only major debtholder.
They actually paid quarterly dividends of $0.06 on roughly 53 mln shares before the SNB event, this amounted to just $12.7 mln in annual dividend payments.
Since the SNB event the company's revenues have come down by more than 35% and EBITDA has been a fraction of previous levels. Cash has consistently went down over the course of the year albeit just slightly. The proceeds of the asset sales went to partial repayments of the loan but of course they also had to pay the brutal interest obligations in the meantime.
They don't need to offer anything. Either they sell FXCM in 2018 or beyond and pocket the money or they also seize the rest of the company then should FXCM still have not paid back the loan.
The convert is still trading at 60% of face value currently, I can't believe it.
That's right. But the shares were already worthless even before today's further 50% seizure of the remaining operating business by Leukadia as the convertible bonds at the exchange listed company level will also mature in 2018 and there's no way to pay them back...
Great deal. FXCM shareholders are losing another 50% of their remaining ownership in the company in exchange for a one-year maturity extension and the allowance of making interest payments in kind (which will further dilute outside equityholders).
So even if the remaining business should miraculously thrive again two years from now, the upside for the outside shareholders has just been capped by another 50%...
Even worse the company's remaining assets obviously did not attract bids that would have allowed FXCM to repay the remaining $197 mln to Leukadia. Subtracting the amount owed to Leukadia the company's cash position is just $10 mln, but this does not yet account for the $155 mln in convertible notes at the FXCM Holding Co. level.
Should the business be sold in 2018, the exchange listed Holding Company will simply file for bankruptcy given that they won't be able to pay back the convertible notes then.