No. Bankruptcy is a result of not being able to pay your debts. With only 3 million in debt coming due in this quarter, they will have no problem paying their debt. I agree that they may have more difficulty acquiring new debt until they prove their new business model will work. However, that has nothing to do with going bankrupt. They really need to also attack their expense side. With $200 million in labor cost per year, a 10% cut in personnel will bring in $20 million.per year.
Why would bankruptcy be rapidly approaching? They have $3 million due as the current portion of long-term debt this quarter with $110 million in cash with good cash flow. Where does the bankruptcy come in?
TSI started 2014 with 311 million in debt and 73 million in cash. It now has 296 million in debt and 110 million in cash. Not sure anyone would think the company is going under. They do however need to cut about 10 to 15 % of their 200 million payroll.
First of all, I have to admit my timing was bad and didn't realize it would drop to this level although it is mostly fear driving the price down. CLUB actually went from 97m in cash to 110m in cash over the last quarter without increasing long term debt. It has been increasing cash every quarter over the last year. Obviously, the company would not be spending 30m on capex this year if it was going bankrupt. It would use that money to pay debt obligations first. The fact that the company reports a loss does not mean it is losing money. It means it uses non-cash write offs so it doesn't have to pay taxes. Sorry, no chapter 11 here.