Concordia Healthcare Corp. T.CXR.R

Takeover/Way Undervalued

[Hockeyz]

CXR looks incredibly cheap.  There are many drug companies/investment firms with billions in cash (making no return) that are looking for ways to fill their drug pipelines where CRX is a steal.  CRX is selling at $8US (all in $US) and could easily fetch double that ($16 or $800M).  The future EBITDA seems to be about $520M/year or $10/share (52 M shares o/s).  Also, there is $3.4 billion in total debt.  Therefore, they could pay $800m + $3.4 billion (to pay off all the debt) = $4.2 billion.  In return they would get $520M + $290M (interest savings on the $3.4 billion debt at 8.5% interest) = $810M in EBITDA/year or a 19.3% yearly EBITDA return on their $4.2 billion investment.  They would also substantially increase their drug pipeline and would also have a further 60 new drug product launches in the next 2-3 years.  They also may be able to market the drugs much better than CRX. This seems like a sweet deal to me.

[LaurenceDaPill]

This post has been removed in accordance with Community Policy

[Marky1]

Hockey..It sounds like a plan,hopefully somebody doing an aquisition is reading this...I do not follow with the $290 interest gain.....According to a Wall Street lawyer I talked to yesterday we are entering the peak season for mergers and aquisition.....now till Christmas....Hopefully something  positive happens in the next 3 months!?

[Hockeyz]

The $290M is the total debt of $3.4 billion that would be paid off multiplied by an 8.5% average interest rate = $290M.  This would not have to be paid now.  Originally I said that it would increase the EBITDA, but the EBITDA (which excludes interest on debt) of $520M would stay the same and the EBITDA minus interest would increase by $290M to $520M.  This would give about a $520M

[LaticelnExile]

This post has been removed in accordance with Community Policy

[Hockeyz]

Lati:  The credit and guarantee agreement you posted are all part of the $3.4 billion in loans outstanding.  The USD term loan has $1.03 billion US outstanding, the pound sterling loan has $637M US outstanding and the revolver is zero as it has not been drawn on as per Note 11 in the June'2016 financial statements.  The $220M earnout is also included inthe $3.4 billion in loans

[Marky1]

So I take it that you are not a shareholder of VRX since you did not state ownership.

[LaticelnExile]

This post has been removed in accordance with Community Policy

[BaytexBull]

hockey:  There would also be penalties for payout the loans that were not considered.The seven year loans you are not going to be able to walk away form by just paying out 8% on a simple interest calculation for a year. We are not talking paying off your credit line, some are secured and some are unsecured loans.   bet it would probably be closer to a $1Billion than $272Mil with

[Hockeyz]

Fine, the purchaser does not pay out the loans.  Then, the purchase price could be say $16 and the company earns at least $4.80 (after all interest costs,etc.).  The return is at least 30% using the expected future earnings since the purchase price is much lower (with keeping the debt).

[Hockeyz]

-I still do not see where debt>assets, not from any analysts, etc. -amortization does not change EBITDA (earnings BEFORE interest, taxes, depreciation and amortization).  It does change bottom line earnings, but that is only for accounting, not for cash earnings -actually, if the purchaser paid off the debt, the return has to be positive as there will be no interest expense.  The only

[LaticelnExile]

This post has been removed in accordance with Community Policy

[Hockeyz]

Lati:  I am not really concerned about amortization, mainly concerned with the cash items like EBITDA, debt and interest.  Not sure where you get pay off debt at 8% of 3.2 + contingent pay.  The 8.5% is my assumed interest on the debt, which is probably high.  If a purchaser can pay down the debt with little penalty, it may be worth doing.  If there is a big penalty, then

[LaticelnExile]

This post has been removed in accordance with Community Policy

[MustardTiger88]

Lattice, I've been following this board since the SP was in the $40's in March.  Are you still just as confident at these levels as you were then that the SP will tank again significantly from here?

[LaticelnExile]

This post has been removed in accordance with Community Policy

[PROtrading]

Or you wake up, realize you've been a complete fool and have been fighting good people who were right and had good intentions.  In that case the "lot of conviction" makes you feel like a complete smuck and you need to eat a lot of crow. Hey, the chinese love chicken feet, I'm forced to eat crow's nest soup as my punishment for being such a smuck.  #1 CXR fool

[Hockeyz]

Definitely not as good a short as it was at $115 or at $90 or at $70, if you were in the stock at those times.  Now that it is at $10.60 and a high percentage of shorts to cover, I would be careful???  Remember, over time, bulls make money, bears make money and pigs get slaughtered.

[PROtrading]

I agree that pigs gets slaughtered or we all want that to happen.  The pig is moved money offshore and I see lawyers all rushing for the roast. Do you like your BBQ or honey glazed? I'll skip thanks.  I prefer the organic pigs, not the ones born in a toxic cocktail of reformulated, overpriced chemicals!  LOL ;-) PROtrading - born again shorter. Warning: Do NOT try to short

[PROtrading]

Do you know when there is the highest percentage of short sold shares?  When a go is heading to zero.  Delist.  Why?  100% profit, you don't have to cover! Now, is this heading to zero?  Yep.  Will it take a breather at $1-$3 yep.  When, after all court discoveries are done and media has had time to prepare all these "ready to eat" meals that the

[Lumberfeverlong]

Hockey Z, you are being bombarded by the SHORT AND DISTORT GANG on this board.  That is not necessarily a bad thing for two reasons.  First, you should thank them since they played a very significant role in bringing this stock to a level where it is trading at 1 X 2016 EBITDA.  Secondly, it is actually helpful for you to get opposing views.  Now, let me give you my take on

[Health123]

Lumber, EBITDA implies that depreciation is not an expense and In CXR's case it is a very big expense because it was paid for by debt and when assets are declilning as quarters go on then you have that as a very real expense.  So the idea of adjusted EBITDA is worrisome when you have these drugs depreciating rapidly but the company has amortized them over 30 years.  My opinion, but I

[Hockeyz]

Lumber: Thanks for the great info.  Quite a bit ties into the information I have seen and some new information to add to the hopper and go through.

[Lumberfeverlong]

Pleasure. Note that I was being conservative on 2017 excess cash.  If the company generates $500M of EBITDA for 2017, which is below guidance for 2016, they will actually have $260M of excess cash for the year. Add that to the $67M or so they likely should have at the end of 2016 and your net debt to EBITDA gets below 6 and out of the danger zone IMHO. 

[Hockeyz]

https://seekingalpha.com/article/3999508-concordia-q2-review-series-misfortunes-mismanagement?li_source=LI&li_medium=liftigniter-widget Yes, you are quite close to the 5.96X net debt to EBITDA for 2017 in the article above, near the end.  2018 at 5.43X, 2019 at 4.75X and 2020 at 4.11X.

[lnvestor198]

This article that you posted is from a  LONG?   Are you kidding me?   This sounds like Q3  will be a bigger disaster. For investors who have lost confidence in this management and stock, Q3 will very likely be ugly. North American segment will post worst numbers, and more write-down is likely to happen. Concordia has been mismanaged and is saddled with debt, only performance

[Lumberfeverlong]

I cannot believe the extent of manipulation from the SHORT AND DISTORT PACK, The passage you quote is not even from the article.  The following is" "Bottom line, no bankruptcy for the next 5- 6 years, trading severely affected by short sellers." The bottom line from my perspetive is that the company has ample time to turn things around as the writer of the article also

[lnvestor198]

Lumberfeverlong:  You are desperate, I get that.  But I am not shorting and distoring.  The passage I highlighted is the very last paragraph ARE YOU BLIND MAN?   This is the article that was put up BY HOCKEYZ.  THE AUTHOR IS A KNOWN LONG.I Read to the end BEFORE YOU BLAST SOMEWONE where you will see the paragraph I quoted. IT IS THE LAST PARAGRAPH.  DO NOT CALL PEOPLE

[Lumberfeverlong]

I am reposting my analysis of the company's projected cash position to the end of 2017 for those who did not get the benefit of reading it due to the all the junk that has been posted by the SHORT AND DISTORT PACK since then.  Do your own due diligence before believing any claims that this company is going to run out of money any time soon.

[LaurenceDaPill]

This post has been removed in accordance with Community Policy

[Marky1]

You make perfect sense hockey...Do you own shares of VRX or just a passer by?

[Hockeyz]

Just a passer by, but looking to pick up some shares if my understanding of the company makes sense.  Therefore, I am looking forward to my thesis being sliced/picked apart by the board.