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AFC Enterprises, Inc. Message Board

cohsgrad 185 posts  |  Last Activity: Aug 21, 2014 12:02 PM Member since: Feb 27, 2000
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  • Reply to

    o.k. Quarter

    by cohsgrad Jul 28, 2014 8:45 AM
    cohsgrad cohsgrad Jul 28, 2014 9:24 AM Flag

    Projecting revenues of $105 to $150 million as they exit year (in other words, next two quarters). Will range from mildly profitable to around $10 million (after tax). Certainly something negative could happen but I don't see it coming out of South America, the source of their problems over the last year so it would have to be somewhere else.

  • Reply to

    o.k. Quarter

    by cohsgrad Jul 28, 2014 8:45 AM
    cohsgrad cohsgrad Jul 28, 2014 9:15 AM Flag

    Reliance Jio. CRNT is primary supplier. To-date is 80/20. Knew they were supplying them but sure didn't know they were dominating.

  • Reply to

    o.k. Quarter

    by cohsgrad Jul 28, 2014 8:45 AM
    cohsgrad cohsgrad Jul 28, 2014 8:54 AM Flag

    Book value is $2.03. Thought it would be a little higher than that.

    Now if they could trade at the same level as DRWI it would translate into around $6 a share. Bit of an exaggeration but not much.

  • cohsgrad by cohsgrad Jul 28, 2014 8:45 AM Flag

    Boy they sure do extend good payment terms to their customers. If they could get that under control they wouldn't need to issue shares.

    Really took a big hit in Latin American sales. Don't guess that was a surprise. Made it up pretty much across the board elsewhere. Took another $2 million hit in currency devaluation. Didn't really provide earnings guidance but I'm guessing they'll be break even to mildly profitable.

    No word on number of shares to be issued. Hoping they keep it down to 10 million but can't say it would surprise me if it were 20 million.

    Down around 4% in Israel.

  • Reply to

    $1.11 Per Share After Valuing Option

    by cohsgrad Jul 27, 2014 11:49 AM
    cohsgrad cohsgrad Jul 27, 2014 4:30 PM Flag

    Would be interesting to know what drove the decision. Obviously they have been cutting it close but barring a problem it would seem they are open to a lawsuit. So did a problem occur? I don't honestly know but if I were a supplier to Dragonwave I would have demanded up-front payment.

    I did an actual standard deviation calculation. Over the last two years it has been 65% They had better use something close to that in the financial statements or explain it really well.

    Adjusting the std. deviation rate down to 65% results in a net value of $1.28. Interestingly if you plug in $1.60 as the share price it results in $1.60 which was Friday's close. If I had received the right to buy the shares I would have shorted the shares down to around $1.60 even if I didn't know anything about the company just to lock in the gain.

  • Valuing the warrant is obviously difficult but I plugged it into a Black-Scholes model with the following values:

    Stock Price $1.80 (was $1.87) prior to deal being announced so I was conservative.
    Exercise Price of Option $2.25 (price is adjustable in certain situations such as follow-on stock offerings but at least there aren't any full-blown toxic elements in this offering).
    Number of years is two.
    Risk-free interest rate 0.5% (.005)
    Standard deviation of 83% (Yahoo beta)

    Value of Call $0.69
    Price of shares $1.80
    Net $1.11

    I don't pretend to know everything about valuing options. The share price has obviously declined far below $1.80 and I didn't do a calculation of the standard deviation (just used Yahoo beta) but I'd say it is probably a pretty reasonable calculation.

  • Reply to

    Rate Adjustment News

    by cohsgrad Jul 25, 2014 9:36 AM
    cohsgrad cohsgrad Jul 25, 2014 4:22 PM Flag

    I'd say that is likely accurate. This sort of thing is always messy but it is still somewhat rare to see such contradictions aired in public.

  • Reply to

    the company hosed everyone

    by hsfeld2001 Jul 25, 2014 4:06 PM
    cohsgrad cohsgrad Jul 25, 2014 4:19 PM Flag

    The last one was $1.20 per share after all the adjustments were taken into consideration. They are "fudgers" when it comes to stock offerings.

  • cohsgrad cohsgrad Jul 25, 2014 4:00 PM Flag

    They can indeed move the price but it very rarely sticks. Have to give it three to six months.

  • Reply to

    WAIT for another 2 weeks to buy it

    by money_is_paper Jul 25, 2014 3:06 PM
    cohsgrad cohsgrad Jul 25, 2014 3:58 PM Flag

    Last time there was a ratchet provision so if share price went down buyers got more shares. Doesn't appear as though there is one this time although I didn't read all regulatory filings so maybe it is there and I missed it.

  • Reply to

    Rate Adjustment News

    by cohsgrad Jul 25, 2014 9:36 AM
    cohsgrad cohsgrad Jul 25, 2014 3:55 PM Flag

    Normally I'd say yes except that I think he is "fudging" all over the place. I wouldn't believe anything he said before the PSC. From what I've read that is more or less what the PSC members are saying.

    In the end I don't know how politicized the PSC is. They could wind up getting something even though they don't deserve it. If the legislature gave them something I'd say that is more or less fair even though I don't like that sort of graft.

  • Reply to

    Rate Adjustment News

    by cohsgrad Jul 25, 2014 9:36 AM
    cohsgrad cohsgrad Jul 25, 2014 12:48 PM Flag

    Should add that the PSC case number is "EC-2014-0224"

  • Reply to

    Rate Adjustment News

    by cohsgrad Jul 25, 2014 9:36 AM
    cohsgrad cohsgrad Jul 25, 2014 12:10 PM Flag

    I always have trouble posting links but if you Google St. Louis Business Journal and Noranda you should see the article.

    Also, was interesting. I read an affidavit submitted by Kip Smith who said that they are going to fail one of their debt covenants unless they get the rate relief at the end of the third quarter. The fact that they fail the debt covenant really shouldn't factor in to the decision in my opinion given their high debt level. Tends to indicate that after a bankruptcy filing the creditors wouldn't have any trouble operating it on a cash flow positive basis. I've not read all the documents but those are disclosed by the Missouri Public Service Commission.

  • cohsgrad cohsgrad Jul 25, 2014 9:43 AM Flag

    Yea they definitely knew. I was also wondering about whether or not the underwriters are maintaining the appropriate firewalls within their organizations. The HC Wainright analyst was way over the top in terms of "kissing-up" in that last call. At least CIBC tried to appear neutral.

    I've not read the filing. Wonder if it has any of the toxic elements the last financing had. Tend to doubt it does.

  • Looks like they are going to lose or at least not get nearly as much as they asked.

    Seems fair.

  • cohsgrad cohsgrad Jul 25, 2014 8:11 AM Flag

    I'd buy if the share price was 60 cents. Anything more than that is wishful thinking although there are a number of dreamers out there.

  • cohsgrad cohsgrad Jul 24, 2014 5:02 PM Flag

    Can understand the need for the offering and they might as well bite the bullet.

    What I can't understand is the need to mislead investors with this unit garbage. Just sell the shares at whatever price the market will take without warrants and without any ratchet provisions.

  • Reply to


    by blues_fanatic Jul 24, 2014 8:15 AM
    cohsgrad cohsgrad Jul 24, 2014 12:29 PM Flag

    Need to sell SAL is driven by business needs (high debt) and taxes but mainly taxes. They have a large capital loss carry forward from sale of Albertson's that expires in around four years. If they can sell a unit they can do it basically on a tax-free basis so they could net 35% more. SAL is the most significant gainer in the group and the most marketable so it is the one who has to go to pay down the debt. Suppose they could sell the wholesale and conventional retail but I'm less sure there is a big gain to be triggered plus I can't figure out who would buy it. Still, you are right, it could happen.

  • Reply to


    by blues_fanatic Jul 24, 2014 8:15 AM
    cohsgrad cohsgrad Jul 24, 2014 11:19 AM Flag

    Would agree although Rainbow isn't big enough to offset the TSA. Sales can bump slightly from Rainbow but the big issue is bottom-line loss from TSA.

    I was impressed with SAL. They had to do this or they would have died. Their best hope is to improve SAL and then sell it off to pay down debt. I don't think they can survive without selling SAL for a good price in the next three or four years sometime.

    Wonder if they talked about impact of TSA and future expectations in the call? Decided to not listen to call and wait for transcript.

  • cohsgrad cohsgrad Jul 22, 2014 8:34 AM Flag

    Short interest has gone down a significant amount and it seems reasonable to assume that this played a role in the run-up in price. Whether the remainder will cover I dunno but there are tax incentives to keep the trade open as long as possible.

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