RE:RE:Deal reached?biggerr, I suggest you read the post below from Meetoo 1600. In my humble opinion, the conversation in this billbaord between 'meetoo 1600' and 'rad 10' for the past one month will give you a good insight into present situation of CXR.
meetoo1600 - (11/17/2017 10:46:06 PM) RE:correct me if I am wrong daveinmiss, as I have said earlier, there is a wide range of possibility within the range of reasonable outcomes. One factor that will be taken into consideration by those negotiating is that, even if the cancelled debt gets 97.5% of the company, it will serve those debtholders no good if the shares are worth only $0.01 or any amount close to that. After restructuring, their interest will suddenly turn, and they will want the stock price to be as high as possible.
Then there is the likelihood that they will want to keep the Nasdaq listing, in which case they have to ensure a share price of at least US$1.00. Nasdaq may give them time to recover to that, but they would have to apply for that, and rarely is more than one year given. So they will likely want the deal to result in a share price of at least US$1.00. Of course, there is the possibility that they will let the Nasdaq listing lapse, and simply trade on the TSX, but I tend to doubt that they will do so.
The thing that most people are missing is that, while historical management made some stupid and, probably corrupt, decisions, with the result that the company is laden with debt, the moment that a big chunk of that debt is removed, it becomes a substantially cash-flow positive going concern, with revenue in excess of $600MM, hundreds of employees, mature manufacturing and distribution arrangements, all in an environment where generics will continue to play a significant role in healthcare worldwide. They just have to neutralize the idiocy of the past, and the restructuring will do that.
If you go into the analytics, and look at industry norms, a generic pharmaceutical company with $300MM+ in positive cashflow and book value of over $600MM, is worth a lot of money, possibly as much as $3B, although the multiples for this company would likely be discounted for awhile in light of its horrible history. But that the resulting entity, after restructuring, minus $2B in debt, would be worth $1.5B or more, is certainly not out of the question. In fact, that value would be low using industry norms.
If one can accept a post-restructuring value of $1.5B, then the only question that remains is how much of the emerging entity will be owned by the pre-restructuring common equity. If it is to be only 2.5%, then they will have to create a total about 2,051,800,000 shares, with the result that each share should trade at $0.73, with that number going up as retained earnings start to build and the past misdeeds are forgotten. On the other hand, if existing common shareholders retain 15% of the equity after restructuring, then they only have to create 341,866,666 shares, with the result that shares should be worth and trade at $4.38 and climb from there.
There is no CBCA restructuring case where the pre-restructuring shareholders retained less than 2.5% of the equity post restructuring. On the other hand, there are quite a few where they retained considerably more. In the case of Yellow Media, it was 17.5%, If it turns out to be the same percentage in the case of CXR, the stock could quickly rise to $5.12 per share and slowly climb from there.
I do not believe that the examples that I have provided above represent the full range of options. The result could be better or worse for existing common shareholders, but it is not because my numbers or analysis is faulty. It is because, historically, these people have not been honest. It took them three quarters to correct asset values that should never have been there in the first place. It's not that the subject drugs, i.e., Donnatal, Plaquenil, etc., have lost value. It is that they never had the values the company (and its auditors, it should be noted) ascribed to them. Those numbers were tantamount to fraud. They were based on hugely jacked up pricing, (and possibly industry collusion), not increased sales volume, demand, or anything like that. It was stupid, but it gave Thompson and Kupinsky the opportunity to pump and dump their stock before the charade was no longer sustainable. As long as current management have come clean, and as long as they show reasonable respect for existing common shareholders, my analysis should hold. It is just pure arithmetic, based on conservative multiples.
But it is not clear that management has come clean, or that it will show reasonable respect for the existing common shareholders. And that is where the risk resides.
biggerr wrote: deal on what, was any deal in the works?