Stuart Olson Inc CUUHF

possible catalysts

[mingzhu]

1, takeover
2, take it private
3, change of management
4, big new infra structure spending in US and Canada.

Energy stocks are turning around big time recently. now they can pay SOX the receivables with cash.

[Latour00]

Nope. 1. Board not amenable because Mgt owns them, 2. Already too leveraged for a buy-out, 3. See no. 1 above, 4. Need a mgt that can run projects profitably. And a partial reversal to the slaughter in Energy stocks doesn’t translate to sudden operational profitability. Ultimately, BK looms.

[mingzhu]

your theory is based on that  most companies are  likely to commit suicide. of course there are a few,as some people do. investing should be  based on that management act rationally when facing life and death. It has total debt of  $126m,  debt/sale ratio is not too high. 

[YoungInvestor89]

Debt:EBITDA is concerningly high and I don't know how they are going to meet the tighter restrictions from the consortium providing there revolving facility. They could be insolvent in 2 quarters if they don't drastically reduce costs. Margins under 3% are not sustainable.

[mingzhu]

indeed debt/epitda ratio is high. here is the TD comments: "SOX's credit agreement leverage ratio (debt to EBITDA) was 4.57x at quarterend vs. 2.65x at Q4/19 and the covenant ceiling of 5.1x (covenant reverts to a 4.25x ceiling in Q2/20). SOX collected a $22.0mm settlement in respect of a project dispute in late-Q1/20, which the company was unable to apply to longterm debt reduction

[Latour00]

The longer the status quo continues, the longer Sr Mgt collects their inflated comp.  This mgt seeks to self-optimize, which is rationality of a (bad) sort.

[wheeloffortune]

That's what I thought when I bought at $4 and sold at a buck fifty.  Their margins are too low and their debt is too high.  They just underbid to breakeven points.  No way to vote management out of there.  No one wants to take it over with all that debt.