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

RE:RE:RE:This thing may as well be called Oil Stores

[Goldbuggy1]

Goldbuggy1 wrote:

StompinTom wrote: Ironically, the cost of capital on the Shares is higher than the debt right now so if they are leaving the dividend in tact and are cashflow neutral to positive, the buyback is a great idea as it is giving a cashflow return of almost 15% here.

Yes, I believe you are exactly right with you assessment if as you say the company decides to leave the dividend in tact and cash flow is at least neutral. There is no reason to think otherwise as LIQ has been paying this monthly dividend of $0.09 per share since they started as a public company in 2004, and 2015 is shaping out to be a better year than 2014 was. So they would save 15% on a share buyback and as you said. But one of the added bonuses to this is by buying back say 10% of there shares (2.75M) they no longer have to pay a $1.08 a per year for these shares down the road either. So every year they will save almost $3M in dividend payments. So a gift that keeps giving.

Another added bonus by the company buying back say 10% of there shares, and if you say they choose to leave this dividend in tact, is simply this. The company would be sending a strong signal that they wish to continue to pay dividends, and with 10% less shares to pay to now, they should find that easier to do that. Especially when 2015 is turning out to be a better year than 2014.