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Saga Communications Inc. Message Board

froddoislost 2 posts  |  Last Activity: Jan 7, 2015 10:53 AM Member since: Nov 4, 2004
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    TITAN MANAGEMENT

    by bobacequ Jan 6, 2015 8:41 PM
    froddoislost froddoislost Jan 7, 2015 10:53 AM Flag

    Of course there is a way out; inventory reduction auction. But then, they already told shareholders Titan was going to do that on a regular basis a couple of years back. Something about 'wholesale' locations they were setting up, possibly one in Morehead. Then they would take every trade-in machine there and sell it at auction if it didn't retail within a certain time period.

    Maybe that didn't happen.

    Also; I wonder how much new iron CNH shoved down Titan's throat going into the downturn?

    According to the latest 10Q inventory figures and Titan's website's location list, their average location has almost $11 million of inventory. They average $6.5 million per location in new equipment alone.

    It seems like it must be awfully difficult to keep the inventory reconciled to the general ledger, given how much iron they have and how geographically dispersed it is. I'd hate to be that guy. New units arriving from the factory, units out on demo, retail deliveries, trade's not picked up, units out on rent and location transfers, why I bet a guy would have a difficult time keeping it all straight. Add machinery at 16 locations in Easter Europe into the mix and, well, it just may not even be possible to have an actual, reconciled physical inventory with a hard cutoff date.

    My guess is that if they actually held an inventory reduction auction there wouldn't be enough shells to hide the peas under anymore. The loss could be staggering.

    I'm sure it's not nearly as difficult to keep it straight on the floor-plan side. CNH and Wells Fargo have to keep really close tabs on that, right? What if Wells Fargo pulled out? Would CNH step in and pick up all of the floor plan? What due diligence would be required? Can CNH perform that DD for themselves or would it require an outside auditor? Questions, questions.

    This is all just idle speculation. I have no direct interest in or independent knowledge of CNH, Titan or Wells Fargo.

    Just my $0.02 on a cold January morn.

  • I have been pointing this out for some time, but the cat is now out of the bag;

    "The macro-economic events that have occurred since Titan Machinery last reported its quarterly earnings on September 9, 2014 increase the probability that the company will announce it has violated its credit agreement with Wells Fargo and other creditors. Its possible that this announcement could be made when Titan releases its 10/31/14 earnings report on December 10th. The company’s share price fell to new five-year low of $11.67 last week.

    A violation of its credit agreement with Wells Fargo (WFC) and its other creditors would likely result in the company having to file for bankruptcy protection. According to the covenants that it entered into with its creditors, it must maintain a minimum Net Income and Tangible Book value to prevent the creditors from calling in the $850 million loan that the company is utilizing from its floor plan financing, etc."

    - See more at: http://www.equities.com/editors-desk/stocks/industrials/is-titan-machinery-on-the-brink-of-bankruptcy#sthash.5tgxBKlL.dpuf

    Warning; still don't want to short it. It's pretty closely held for a publicly traded company and CNH may decide to bail them out to preserve market share. Not clear, as CNH' position isn't really much better.

SGA
40.67-2.02(-4.73%)Jan 30 4:00 PMEST

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