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R.R. Donnelley & Sons Company Message Board

perham1 2 posts  |  Last Activity: Mar 26, 2014 12:47 PM Member since: Apr 16, 2000
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  • Reply to

    Why the free fall?

    by sierachook Mar 26, 2014 11:47 AM
    perham1 perham1 Mar 26, 2014 12:47 PM Flag

    Probably due to the terms of their debt refinancing which allows for issuing 10% additional shares at $4.19 per share. "Lee previously announced a commitment by a group of lenders to finance up to $200 million of 12.0% second lien debt with a maturity in December 2022. The size of that facility will be reduced to $150 million as a result of an increase in the size of the new first lien term loan facility. Under the second lien loan agreement, each lender will receive, at closing, its pro rata share of warrants to purchase, in cash, an initial aggregate of 6,000,000 shares of the Company's Common Stock, $0.01 par value, subject to adjustment, which represent, when fully exercised, approximately 10.1% of shares outstanding on a fully diluted basis. The exercise price of the warrants will be the lower of (1) $4.19 or (2) the volume-weighted average trading price of the Company's Common Stock for the ten days prior to closing."

    Sentiment: Buy

  • perham1 by perham1 Mar 22, 2014 12:01 PM Flag

    If my math is correct annual interest cost will drop from approximately $82 million per year to $73 million per year and outstanding shares can increase by 10% with an estimated $25,000,000 in proceeds for the issued stock. This will increase earnings per share by about $.16 per share annually less the loss due to dilution. The big bonus in extra years till debt maturity in the face of expected increases in interest rates (with the downside of LIBOR going up). The refinance seems priced into the current stock price but LEE is becoming more of a long term investment at this point.

    Sentiment: Hold

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