Your Concens...Okay, let’s address all of your “concerns”:
#1. Management did a strategic raise, a $10.01 million bought deal, at $0.70. This was not a public offering. The only people “hurt” by this were the institutions - Beacon, Cormark, and Paradigm. Excuse me if I don’t feel bad for them. If they advised their clients to buy at those levels, well, that was their own prerogative. Not to mention it was a bought deal, so they ate those shares themselves if they didn’t/couldn’t market them. This was an excellent decision by management to complete this raise near the 52-week high, all that while, not selling a single share themselves. And if you were one of the retailers who bought near $0.70, now is the perfect opportunity to average down your position. I bought some shares up there, but I more recently bought a lot more around $0.50.
#2. I don’t personally know Jason Zhu, Grace Lim, Sue Park, Young Lee, or Bev Reid, but if they are no longer with LOY it is for a reason. They either left on their own accord for whatever personal reason (maybe they wanted to cash in all of their shares and options for a big payday, maybe they didn’t agree with Andrew, maybe they wanted to pursue other career opportunities or life pursuits – we can speculate all we want here), OR they were laid off and received tidy severance packages from what I gather from the financial statements. The betterment of the company in one way or another for motivated individuals to take the reins.
Getting rid of 5-year contracts like Bev Reid’s now is a big win for the company. And from what some have commented, she even left on her own accord. I see that as a big win. I mean who is Bev Reid? Must be a dime a dozen out there who can do that job, and at a much cheaper rate. I don’t understand how you don’t consider overpaid, legacy executives Dead Weight? We can speculate why she left all we want, but honestly, none of us know. Maybe she didn’t want to come into work every day after selling her baby for $8 million? At the end of the day, the largest value proposition is the students that Loyalist acquires.
Regarding any class action lawsuit, I would be very interested to hear the grounds that these people would be proposing litigation on. They either left under their own terms, or were laid off and received a nice severance package.
In terms of who is running the schools right now, obviously somebody. Andrew doesn’t write and issue a press release every time a new person comes or goes.
#3. In regards to LOY’s financial situation, you have a very convoluted view. Yes, as of April 30th LOY had $6 million in cash Re: the press release. Yes, LOY owes former MTI management $2 million, due yesterday. HOWEVER, you’re confused about LOY’s expenses and convertible debt. Direct Costs and General & Administrative expenses accounted for $19,653,742 and $7,850,145, respectively. Now read this statement from the last press release:
“Our assets support our current run rate expectation of $63-million for 2014. We expect to focus on integrating schools this year, improving the company's overall profitability. While our overhead or corporate costs, more than doubled last year, we expect them to stay fixed, and perhaps fall, moving forward, which should create the leverage needed to see meaningful profit growth. We therefore expect to see margins improve this year.”
The $63-million revenue will be front-loaded, but even if we divided it evenly at $15.75 million per quarter, so I see Loyalist having no issues addressing their current outstanding obligations of roughly $6,875,972 per quarter.
As for the convertible debt which should have been paid yesterday, it should only have amounted to ~$187,500. Given the metrics I listed above, again, no issue.
#4. In regards to student housing and the new franchisee program, I don’t know how you can contrive them as negative EV opportunities. You say you called LOY and reported they own no student housing. It’s true, they don’t OWN it. They LEASE the student housing properties. And they have numerous properties throughout Vancouver, Toronto, and Halifax. There are plenty of photos on the campus websites and have been posted on SH before by myself and others. Trust me, these properties are very real, and have very real upside to them for Loyalist. This is an extremely low-risk venture (Loyalist can lease properties on an as needed basis) and then sublet them for significantly more by calling them student dormitories and student housing. Based on the current number of beds at full occupancy (164), let’s assume $750/per bed/per month and that’s almost $1.5 million in revenue. And that’s the program in its infancy. The housing market in Canada is a multi-billion dollar industry. Students want to get the full package from their places of learning. Now, Loyalist can offer that.
Same goes for the franchisees. While we don’t know the details yet, what downside is there for Loyalist? More international exposure. Franchisees pay a licensing fee upfront. And Loyalist collects royalties. As per the press release:
“Under the program, Loyalist will offer its curriculum and grant its own diplomas to franchisees and their students in exchange for a combination of fees and royalty payments. Loyalist expects that franchising will create substantial high-margin revenues by allowing the company to earn income from overseas students who choose to study in their own countries.”
These don’t have to be large operations. They can be one-room operations. These overseas franchisees give Loyalist a foot in the door in Mexico, China, Turkey and South Korea. They can expand Loyalist’s international footprint all with a very streamlined process. Low-cost, high-margin.
So yes, please, let’s stay with the facts here. Not speak damaging hearsay because of a personal vendetta with the company (your posting history is quite indicative of that). I’m an investor in this company. Are you? Because this is nothing to joke about. You have been making a thoughtful and contrived effort to defame and slander Loyalist management and the company itself.