Q3 financials had to be delivered to the lenders today, not filed with the SEC with whom they are already late filing. We should know in the next day or two if they delivered the financials on time and if so the company will provide us with the financials and previously announced they would hold a conference call.
I'll try to explain this simply. The reason why cash is expected to be $50 million higher is that the company borrowed $100 million and then repaid $50 million of outstanding borrowings, neither of which were included in the forecast previously.
As to the long paragraph that you posted, they could have just as easily said that they used the $100 million of proceeds to add to liquidity while using cash on the balance sheet to provide the cash collateral, the money is fungible so the source doesn't matter. The company ended last quarter with $206 million, borrowed $100 million, repaid $50 million and had to use $89 million for collateral paid off $50 million of peaks loans and probably generated cash of $25-$30 million. I own some of this stock so I would like to see good results but this is not that volatile of a business that cash flow changes by $50 million in a matter of a month.
On my other point we are now worse off by the $3 million of fees needed to obtain the facility and $9 million of annual interest on it, in addition to the interest on the LOC, so good work management.
This news was not good from a shareholder's perspective. In your previous post you attributed the increased cash position to "free cash flow" which is completely wrong since the company stated the increased cash position was due to the fact that they borrowed the money. Even worse, they borrowed it from Cerberus, one of the biggest group of loan sharks around at a rate of nearly 10% and they had to pay about $3 million in fees for that opportunity. As a shareholder I am disgusted by this since we are in this position because of this terrible management group's inability to complete a basic task and file timely financial statements. I think at the upcoming shareholder meeting a proposal should be made to have management pay the increased interest expense we are going to see as a result of their screwups including the expense of the letter of credit that will have to be posted for 5 years.
But you can't have a lady running a company where actual strategy and competition is involved since no guy would ever want to take orders from a lady other than his wife at home. Yahoo CEO was just window dressing since the company is just a holding company for Alibaba stock and pepsi CEO, who could mess up selling salty snacks but this company and GM are disasters waiting to happen with ladies in charge.
In May they estimated that they would be making about $115 million of payments to the PEAKS trust over the remainder of the year and according to the 10-K there is not really any change from that figure. The timing of that $40 million may be somewhat new but anyone paying attention knew that it would be paid at some point this year.
Yes PEAKs should be mostly done by the end of the year and if they generate anywhere near the cashflow they projected at the beginning of the year, they should be on track to generating cash in 2016
There is nothing new in the 10-K and there never was an expectation for there to be since the company already reported its year end 2014 financial results. The only thing different was the presentation of the peaks loans and debt which was already known before. The real news will be tomorrow when we receive new information on Q2 and Q3. Today it was just a relief that the company finally complied with a loan covenant and appears to be on track to be back into full compliance with regulatory agencies.
For those of you who come here for answers, you aren't going to find any. We have people saying the price will go to $45 and others who say it will fall to $2. Some have positions in the stock which is the reason for their extreme posts, others are here just to get a little joy out of antagonizing shareholders or those short the shares.
The only fact we have is that the company has not issues financial statements for many months and until we find out what is in those financial statements, no other than those at the company know what the state of the business or its value is. Don't come here looking to answers because all you will get is wild speculation of some kind, many times being posted by those who claim to know something when they know nothing more than the rest of us.
In addition to the cash they have real estate worth about another $200 million. They are cash flow positive by about $100 million a year. The CEO resigning likely means they are a takeover target since unfortunately for us shareholders CEOs value their jobs over their shareholders most of the time but that obstacle is now gone. A conservatively managed company with one of the best reputations in the industry is a very attractive target in an industry that needs consolidation. Just hope that the board holds out for a fair price.
The value of the business wouldn't drop unless in the deal that was called off the company was selling the real estate for more than it was worth in which case the company would be losing out on that higher real estate value. At this point the company now owns real estate instead of cash while it would have owned more cash and less real estate if the deal had gone through so from an asset value standpoint it is in the same position.Its earnings will actually benefit since it will not be paying out nearly $10 million per year of rent on the properties.
Any business can file for bankruptcy protection regardless of the makeup of their balance sheet. Whether a judge lets that filing proceed is another thing and in the case of a highly solvent and liquid company such as this that would be the case. There is no way that equity holders would allow creditors to steal a company that has virtually no debt and $200 million of cash with another $200 million in real estate value from them. Since that is not an option being considered by the company, I would not consider it a possibility if I were you.