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LIQUOR STORES NA LTD 4.70 PCT DEBS T.LIQ.DB.B



TSX:LIQ.DB.B - Post by User

Comment by Goldbuggy1on Jan 16, 2016 4:57pm
66 Views
Post# 24465402

RE:RE:RE:RE:RE:RE:RE:RE:Power of the USD

RE:RE:RE:RE:RE:RE:RE:RE:Power of the USDThe company has several options in raising more money, which they don't really need right now. They can extend there Credit Line. Sell Stocks, which I don't think they would do at these low prices, or offer more debentures. Sell Debentures paying them 6% a year, (last ones sold paying 5.85%) and buy back stock where you won't have to pay 15% a year on dividends, and thus you saved yourself 9%. No? Expect some big financing in February or the end of April which will be good for the company and also protect this Dividend.
 

 

That would be a great idea, to issue debentures at 6% and use that to buy back shares, very smart move long term. 

[/quote]

Yes, I think it is a good idea also. But there was also 2 hidden points I tried to make here. 1) That at these low share prices, and if the company wishes to continue paying a monthly Dividend, which they have done since 2004, then perhaps the best buy the company can make right now is buying it's own shares. Even through borrowed money like Debentures. Not only do they save an immediate 9% on Dividend Payments, they also increase there EPS right away which also reflects on there P/E Ratio. Keep in mind that when LIQ did sell shares last time, they sold them for around $14.85 / share (if I recall correctly). So buying them back at $7 or even $8 looks good in paper to me. 2) If a Dumb Retail Shareholder like me, and you, can see this is a good idea, you can be sure there experts see this to. The big difference between me and them is that they need time to implement this plan. To set up the sale of Debentures but also get permission from the TSX Exchange to buy back there shares. Which if I recall they can buy back up to 10% per year.
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