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

Privatize Provincial Stores

[mercatos]

Although on the surface it sounds like a good idea for LIQ to perhaps buy some existing units if Ontario or NB or any other province privatizes their liquor store network, I would excercise caution.

To purchase an existing location would in my mind include as part of the deal a couple things that would make it sour.  Grandfather existing wages paid to these government eimplyees.  Keep them unionized as another condition.  This would make it cost prohibitive.  

Being allowed to open stand alone would make more sense.

However in saying all this, I would not think spending any capex in Canada would make sense.  All Capex should be invested in the US growth and cherry pick the right jurisditicions balanced with the sales opportunity growth is better use and leverage for capital employed.

Also I really do not think LIQ will make any changes on Dividend and Share count for the next 24 months.  They need to play out the 7 point plan, keep the institutional partners happy and leverage US growth to further seek extra capital for expansion.  

I set up my Flipboard news with a Liquour as a topic.  I read that in the US licences are hard to come by and demand a premium price.  In saying that US banks are very willing to finance ventures surrounding anything to do with liquor sales.

LIQ shoud make it a priority to focus on US expansion and illustrate clearly in any investor package and company presentation determined they are.  It would be a good idea to spin out US operations as a stand alone reporting into LIQ and make some aggressive projections.

LIQ can be a true consolidator in the US and that story is not widely known or understood yet.  It is the responsibilty of LIQ leadership to beat that drum loudly and create that investor excitement.  That is the only way we are going to be back into the mid 30xP/E ratio this stock deserves.

Cheers

PS dont forget to get your cards, chocolates, flowers today