Concordia Healthcare Corp. T.CXR.R

RE:RE:RE:RE:RE:RE:RE:scotia bank - involved in deal?

[Pj1958]

LETTUCE.... And if there is no equity offering , will you change yours?

Lattice wrote: @visionaryfool, You sound just like Thompson.  I don't believe those numbers. The high unexplained receivables and use of "provisions" it is likely they are stuffing the q.  If an equity offering is announced, will you change your long thesis?  

visionaryfool wrote: Not sure I follow the 2 year contingent paper. Their total contingent payment at full payout to AMCO is $200M due later this year with an option to defer half till early next year. As of Q1-2016, the Company had $175M in the bank (lets take out $25M for the recent acqusition so about $150M with acqusition included). Company generated ~$23M last quarter all in (including contingent payment of $19M). Given Q1 is typically the weakest quarter, even if we assume that is the runrate for the rest of the year, the Company would generate an additional $50M which would bring the cash to around $200M. IMO, it seems like they would have sufficient cash to pay AMCO contingency but it would be more prudent to excerise the option and pay only half in October and the remaining early next year to ensure good cash flow management.

Lattice wrote: @visionaryfool,  I am already counting that CXR will have to draw on its revolver from GS to pay AMCo, considering the annual interest obligation and 2 year contingent paper to Cinven and there are also required payments to "wholesalers/distributors" [i have to add, an interesting channel arrangement] that have been identified as hidden risk on the financials.  CXR knew that it would be cash drained, or they would not have negotiated with CInven to be allowed an option to defer half the 144m GBP 2year paper, as it was originally all due in a year.  The company needs to do more M&A to continue their act of financial engineering, hence the evolution of the strategic committee. My opinion, of course, do your own homework.

visionaryfool wrote:
I think we agree that the timing of the acqusition was not ideal. If they had closed a month before, I doubt they would've had any issues at all but September happened to be the witching month for pharma.

They still have a ~$200M line of credit (if memory serves). I don't think an equity raise is in the cards as there is no need for it. They are servicing their debts and no signifcant principle is due for next few years. Unless the Company is not able to service debts due to significant slowdown in revenue, they won't look at an equity raise until some large payment is due.

I think they're gona just be patient and ride out this turmoil till after US elections.