Join today and have your say! It’s FREE!

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}
By providing my email, I consent to receiving investment related electronic messages from Stockhouse.

or

Sign In

Please Try Again
{{ error }}
Password Hint : {{passwordHint}}
Forgot Password?

or

Please Try Again {{ error }}

Send my password

SUCCESS
An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Quote  |  Bullboard  |  News  |  Opinion  |  Profile  |  Peers  |  Filings  |  Financials  |  Options  |  Price History  |  Ratios  |  Ownership  |  Insiders  |  Valuation

KGIC Inc LGLTF

"KGIC Inc is an educational organization based in Canada. The company owns and operates private English as a second language school, career colleges and community colleges in Toronto, Vancouver, and Victoria."


GREY:LGLTF - Post by User

Comment by BlueHorseshoe13on Dec 27, 2015 9:29am
184 Views
Post# 24413844

RE:RE:RE:This stock turned into a traders paradise

RE:RE:RE:This stock turned into a traders paradiseWith all due respect, I'm not sure I agree.

It could be that anyone buying at a half cent was thinking, hold on: This company did roughly $34M GR in the last 12 months. And the industry has an EBITDA margin of roughly 23%, and trades elsewhere around 10-17X EV/EBITDA.  So then they might think, well, if someone can right this ship, it might be worth something like $34M*23%*10x = $78.2M, less the $12.2M in debt leaves $66Mfor prefs and common.  There’s about $7.3M in prefes out there, so that’s roughly $58.7M for common, or about $0.32/s on 179M o/s.
 
Then they might think, let me put on my BMO hat.  The lender has two options; a) force it into creditor protection and carve it up, or b) restructure the debt.  Option a would involve selling off the subsidiaries as was done this summer in an orderly liquidation, with debt and prefs likely covered, and commons torched.  Option b is to replace management, convert to a 3yr amortizing facility and exit forbearance, seemingly condition on a $3M raise in pref shares.
 
You might think about who’s holding the commons and how a decision to roll up a company that had potential would be viewed by the markets, and how a decision like this might affect the lender in the future.
 
You might then think that a credible, and plausible alterative exists, and you might believe that a bet at a half cent has better than a coin toss’ chance of coming up heads. 
 
And as it turns out in this case, you would have been right.
<< Previous
Bullboard Posts
Next >>
USER FEEDBACK SURVEY ×

Be the voice that helps shape the content on site!

At Stockhouse, we’re committed to delivering content that matters to you. Your insights are key in shaping our strategy. Take a few minutes to share your feedback and help influence what you see on our site!

The Market Online in partnership with Stockhouse