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

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

[Goldbuggy1]

FootballFan1 wrote:
Re. share buybacks: Judging by their latest Q3 2015 financial statements, LIQ doesn't look like it has the money to buy back shares: The vast majority of their current assets are tied up in inventory - Their quick ratio is very low - Explain how LIQ is going to pay for their recent acquisitions / new stores, debt payments, ongoing operational and administrative expense, plus the dividend, and still have money left to buy back shares......?.......Companies that are cash-rich can buy back shares - From what I can tell, LIQ is not cash rich - Take a look at their Q3 2015 balance sheet and tell me how they'll pull it off.....By the way, LIQ reported their Q4 in early March of last year - will be interesting to see how their Christmas season quarter of 2015 went and how it compares to the Q4 of 2014......

Well I guess you missed this then: "In Canada, Liquor Stores has a secured revolving credit facility with a three year term ending on May 31, 2016. The credit facility has a committed aggregate borrowing limit of $175 million with the potential for an additional $50 million (the latter provided on request and on a best efforts basis by the lenders). As at March 3, 2015, approximately $51 million is outstanding under this credit facility." This means they can borrow up to $225 Million and $175M no questions asked just on there Revolving Credit Line. This was written in March 2015 and said they borrowed $51M then, but I seem to recall reading that in November this was up to $83M (mostly inventory for Christmas and New Years). I will check later. Now if you consider that LIQ borrows the cost to buy 100% on the 2 N.J. Stores ($30M US) and to open 2 large-format stores in the N.E. ($5M US) Then you can look at them borrowing another $35M US, or about $50M CAD. Add this to the $83M owed already and you have $133M in debt. If they bought back 10% of there shares using borrowed money, at say $8/ share, they would need to borrow a further $22M. So that places them at $155M. They still have $20M they can borrow and up to $70M if need be. Since it cost about $2.5M US to open a large-format store in the USA, this is a lot of new stores. But then you also have to consider the company can also sell more debentures as there is no limit on how many they have. Especially when you use that to pay down debt. Oh Yeah! Companies that are cash rich don't buy back shares. They don't need to then. They are obviously successful being cash rich so the share price would already reflect in this and by high in price. What they usually do then is pay dividends. Here is the link showing LIQ Revolving Credit Line. https://www.liquorstoresna.ca/Portals/5/documents/Investor%20Information/Other%20Information/YE%202014%20-%20Revised%20Annual%20Information%20Form.pdf