Warning Just a warning to perform good DD before investing in this company. I have previously held DirectCash and attended some of the earlier Annual Meetings. Additonally, I have some keen insight into the workings of the company. I will present no insider info, everything here is public knowledge:
1. The President and CEO, Jeff Smith, is only a high school graduate. His correspondences reflect his level of education. He may be over his head with these recent international acquisitions, and the massive instant growth of the company.
3. Smith holds approximately 10%+ of the outstanding shares. Via public record and private info, he is in the middle of a major divorce battle. The likely outcome will be his ex-wife will hold over 5% of the company with no plans to hold long term.
3. Both Moody's and S&P have rated the proposed issue of $125 Million in unsecured notes with Junk Bond status. This likely means the interest rate will be far higher than anticipated.....if they can find purchasers. If the deal does not go through on Aug 08, there could be major penalties from the bridge financing. If it does, additionally interest cost could hit the bottom line by $5 Million+/year. If this happens, the first item on the chopping block will likely be the size of the dividend.
4. These two deals, along with many of the previous acquisitions, were made with OPM (other people's money). DirectCash has very little skin in the game. Owing to the fact that they distubute a significant portion of their net revenue in dividends, they have massive outstanding debt, and are therefore extremely susceptable to interest rate movement.
5. DirectCash's first international foray into another country, Mexico, is seemingly not performing very well. Can Smith, who is described as a micro-manager, pull off successfully running two additionally large businesses on two separate continents? What if he fails?
6. Transaction Volume an a per ATM basis in Canada is decreasing. Apparently from the S&P report, it is also decreasing in Australia. The market in Canada is saturated. To increase revenue, DirectCash has impemented a number of nickle and dime charges against their customers, which, in turn, has alienated a good number of them. Will they renew with DirectCash, or look for a more friendly company?
A long term play? Do your DD!