TA was trading around $11 at the announcement of the C-Stores acquisition. They've lost over $50 million in market cap post c-store and share issuance announcements. Given they were going to buy the c-stores for $60 million, havent they effectively paid twice as much given the destruction of shareholder value that has occured since?
Given this type of irrational behavior that expands revenue at all costs without regard to shareholders, who is stepping up to take the 5 million share issuance? At such a price, it is pretty clear why management is doing this deal. The conflicted board with RMR and HPT, which TA pays rents and management fees to, get business from TA from greater revenues (not profitability). Management also gets higher salary from managing a bigger company. Who loses? The shareholders.
If their intent was to price it at $10 to raise $50 million, given the drop today, and the potential continued drop until they price it, the stock value drop alone is going to be worth more than the value they will raise. By the looks of it, pricing will probably be in the $8.50-$9.00 range, effectively wiping out $50 million in shareholder value. What a costly equity raise.
Im surprised nobody is questioning whether it makes financial sense to buy the C-stores via an equity issuance. In addition to the $60+ million paid, TA's stock has collapsed by 20% on the C-store and equity announcement to finance the deal. From a financial analysis point of view, the cost for this deal is the $60+ million paid plus the 20% collapse in stock price ( equiting to $60million in lost shareholder value).
Anybody a finance person out there? Am I not looking at the cost benefit analysis correctly? If TA had the cash on hand or was able to get a bank loan, then the economics of purchasing the C-stores may make sense, but to issue shares and causing the share value to drop by $60 million, you've effectively paid twice as much for these C-stores and therefore, I highly doubt this makes sense from an ROI perspective.
I bet step two after they dilute shareholders at a huge discount is to sell the land/building to HPT at an artificially low price and pay twice the going market rent to HPT as they've done in the past. It took shareholders years of painstaking lawsuites to get current TA rents down to market levels.
Maybe 10 yrs later, the stock will come back. But the point is the stock has collapsed, and they will sell stock at these collapsed prices, diluting shareholders pretty badly.
Such a nice business that should see business and stock increase along with the economic improvements. TA could have so much potential, but management destroys shareholder value at every opportunity. TA management's Christmas present to you shareholders is a 20% destruction of shareholder value. These are very very costly C-stores that mgmt pitches are profitable and a great buy. Other than the purchase price alone, has anybody really analyzed how much these C-stores really cost shareholders? Issuing and selling stock at a collapsed stock price is a real dilution event on horrible terms. It is like selling your house at a 20% discount to market in a fire sale. So the next time management praises themselves for what a steal they got with the convenient stores, someone should chime and and ask did mgmt factor in the opportunity cost of selling shares a fire sale prices to finance the deal.
If you look at sector companies, they've benefited drastically from the rise in nat gas as well as strong oil prices. Companies like BBG and most recently KWK have seen their stock trade close to highs for the year. Why has FST not benefited from rise in commodity prices and in light of a clearly strong economy with 3%+ economic growth?
Is this just tax loss selling or are fundamentals worsening? Hard to see things worsening when nat gas and oil prices are strong and the economy is picking up steam.
PE firm Apollo Capital owns like 50% of the common shares still and Im sure they want to exit at a profit, not loss. Even if NOR gets downgraded, havent they already extended their debt out several years and dont need additional financing, so why does it matter that their debt gets downgraded?
It is unfortunate their business is so levered to aluminum prices, but if they do have excess cash, buying back either stock or debt at these depressed levels would be very accretive assuming they dont have liquidity issues. Given no near term maturities, ever analyst report I've read says no near term liquidity issues. So what is the risk here?
buying stock back??? Look at the inside transactions. The only thing insiders are doing are selling. Their heavy selling is probably contributing to this decline.
It is big when the stock is cratering as it is and mgmt adds fuel to the fire by unloading over a million dollars worth. Also, just from a PR perspective, how bad does it look when all you see is insider selling when the stock is in free fall? If as you say, it is immaterial to them (the amount of shares), it does show serious lack of judgement by mgmt to make the decision to sell.
TWTR almost worth as much as Yahoo, which owns Alibaba and has 10X the revenue. What do buyers at these levels really expect for a return on TWTR? Wait until insiders start unloading after waiting period ends.
Too early, everybody is talking about $100 soon so why do a secondary now when you can do it at $100?
So you are saying these multi-million $ paid execs at CG are second tier to the likes of BX and KKR? CG is one of the worst performing private equity firms.
this is going to swallow facebook soon.
With people talking $100 easily, this thing still has 50% upside. Cant beat that type of return. All aboard...
TWTR will exceed the value of yahoo probably tomorrow. Should do a takeover with stock like AOL acquired Timewarner. Great way to get revenue and assets under TWTR.
And yahoo has like 10 times twitters revenue so instead of hoping ad revenue takes off, just use TWTR high stock price to acquire yahoo and revenue grows ten fold over night.