What A Trainwreck...... My thoughts on recent developments: "
Concordia...announced that it has exercised an option to defer half of the anticipated £144 million earn-out obligation due to Cinven1 and the other sellers of Concordia's International segment, to February 1, 2017..... (which includes a financing charge of up to £1.4 million) on or before February 1, 2017......." Appears CXR's cash flow is not as strong as advertised given they are willing to pay out an additional 1.4 M pounds in financing charges to defer this earn-out payment to February 2017.......
FROM REUTERS:
"C
oncordia......is discussing alternatives to a leveraged buyout that include divesting a minority stake to a private equity firm, people familiar with the matter said on Monday. The sale would raise cash to ease the burden of Concordia’s US$ 3 billion in debt as it faces curbs on drug pricing from governments and companies. The latest round of talks comes after negotiations about selling the company outright failed to produce a deal that would be acceptable to its board, the sources said." Seems the entity that provided the "opportunity" Mark Thompson mention in the last CC likely did one of the following:
a) Made an offer at a premium to the current market price of CXR shares that the stubborn Board rejected because the Board is under some illlusion that the company is worth far more.......
b) Made an offer around the current share price which the Board also rejected.
c) Took at look at the situation and bailed out entirely.
Also, in my view, "Divesting a minority stake to a private equity firm" means share dilution as I expect the interested firm (if it exists) will want CXR shares at a significant discount to the current market price.......But fear not, they seem to have decided instead to increase their debt even more:
"Concordia......today announced its intention to commence an offering (the "Offering"), subject to market conditions and other factors, of up to $350 million of new 5 ½ year Senior Secured First Lien Notes.....Actual terms of the Notes, including interest rate, principal amount and maturity, will depend on market conditions at the time of pricing."
In other words, even after the delay in earn out payments, the company still has debt / financing issues and is willing to go to the market and get a loan at what will likely be an extremely high interest rate to stay alfoat (provided some entity is indeed willing to loan them more money)........
SUMMARY:
This situation appears to just be getting worse....I find it astonishing that the shares are still trading above $6.00........this company is a mess, yet Mark Thompson remains Chairman and CEO and the Board appears to be either impotent or unwilling to make a change at the top..........