The price looks pretty expensive given the current business conditions. PEIX is paying more than $1 per gallon of capacity.
The deal unnecessarily exposes the company to business risks it was shielded from so far.
Aventine's plants are outdated and require immediate and huge capex commitments
The balance sheet gets killed again by $135 mln in debt.
The share price gets killed by almost 18 million new shares which will ALL hit the market soon or already started hitting it despite the deal has not closed yet.
The deal is margin dilutive due to outdated plants and competition in the mid-west
Size doesn't really matter here as the deal does not have much synergies but rather exposes PEIX to huge risks. Sell.
Very disappointing that they only managed to participate in year end budget flushes by discounting their products heavily
Despite revenues coming almost 20% above analyst expectations gross margins will be actually BELOW the guided range of low to mid 60s. Selling discounted products at a loss does not seem to be a viable business model going forward at least not to me.
Would expect the shares to give back ALL of the gains as the increased revenues for Q4 were achieved solely to DEEP discounting of already low margin products as evidenced in a whopping 10% drop in gross margins from Q3.
This is just plain dumb. While the merger clearly looks like an expensive, ill-timed and ill-fated deal even PEIX management will have done something close to a due diligence before buying Aventine. So at least PEIX and their consultants had full insights into Aventine's books. By the way it doesn't take much to go through the books of a simple business like ethanol production.
They have 6 people employed two blocks from Supercom. There's zero reference to the company on the Internet apart from their own website
The corn price is up 30% from September so clearly margins are getting absolutely killed here for ethanol producers. PEIX is experiencing even more selling pressure because of their expensive ill-timed and ill-fated acquisition of mid-west ethanol producer Aventine.
there's no way they would have been able to eliminate that much debt from their cash flows within two years but the Valero deal might have contributed to the debt decline.
$50 mln in CLAIMED contracts actually - I still believe the company is a fraud and today's news forther reinforces my view. This is most likely a buddy deal as the company is located almost next to Supercom in Herzliya. And of course the purchase price does say a LOT about the revenues.
With the aggregate purchase price not to exceed $2.5 mln current annual revenues of the company will be somewhere between $0 and $500k at the very best. Given these numbers the company simply CAN'T be profitable or we must assume that their people work for free and there are no other costs associated with doing the business (which business by the way - there's zero reference to the company in the whole internet).
Anyway even if the company does miraculously earn a profit how can this be "very accretive" to the earnings of a company the size of Supercom ?
Things don't add up here once again.
stock close to day lows despite the market rebounding here - adding more to short, looking to cover around $4 at session end.
pkjvdr is right - on the call they said, neither management nor the company would be allowed to buy stock until the acquisition has closed. If they did they obviously violated corporate governance principles again. Put I suppose the press release is just another hoax.
I firmly expect the call to be a disaster once analysts discover the capex required to bring the outdated Aventine plants to produce acceptable yields.
the buyback plan even if fully executed wouldn't be enough to offset the dilution experienced by shareholders over the last 12 months.
YES SIR - huge gain and another good call. Given the company's history the news might be just another hoax. Actually nobody will be able to verify if they indeed bought shares
Tiny 6 people outfit just three blocks away from the Supercom headquarters - wouldn't wonder if this is a well disguised related party transaction. Apart from the website there are absolutely no references to the company on the Internet.
would expect the shares to end up in the red despite the news
actually the second part of the press release seems even more meaningful to me:
"in addition, the Company was able to purchase stock in open market transactions in excess of $10 million in principal amount during the open trading window pursuant to its previously announced buyback authorization. The Company also established a 10b5-1 plan to remain in effect during the closed trading window associated with the closing of the fourth quarter. All specific details of the Company's buyback activity and management purchases going forward will be reported on its regular quarterly financial reports."