Concordia Healthcare Corp. T.CXR.R

Here you go

[EyeDontBelieveU]

RBC CAPITAL MARKETS


Downside scenario

Our $0 downside scenario utilizes a 7.2x multiple on 2018E Adj. EBITDA of $418MM (prev. $422MM), generating a value of $0.00. This scenario assumes slightly lower than anticipated portfolio demand and assumes the equity loses all value. We also assume increased AMCo competition and lower Donnatal demand. 

[trivela]

What the heck! A 7.2 multiple! Why not a 6.95, or 7.15, or even a 7.05 multiple! Shorts are salivating with this kind of "research"! This is a typical half full/half empty glass scenario. Let me just remind that the first debt maturity is the bank debt (dollar and pound) and it is .... in 2021. So we have to wait for 2017, 2018, 2019 and 2020 to see if the company will default .... At

[rad10]

Which is why the secured first lien got me salivating......................  Effective yield of 11% until doomsday around 2020

[EyeDontBelieveU]

Wrong.  Coupon on the 9.5 notes is due in a few days.  The 2nd earn out payment is due in two weeks.  The bridge loan is due in Oct 2017 or the interest rate jumps to 11%

[EyeDontBelieveU]

  Oh and I didn't mention the coupon payments due on the other 7% notes or the first lien notes.    They have to service the debt.  That is what the shorts do not think will be possible with the declining revenues from their drug portfolio and the potential CMA fines and regulatory risk of Donnatal.

[rad10]

  True - but these are all doable.  Question is how long can they keep going. Any recapitalisation the equity and unsecured are gone.................

[trivela]

They have $410 in cash, anticipated EBITDA or $400 in 2017, how on earth will they have any difficulty paying down the earn-outs or even the bridge loans (the bridge loans represent more or less $120 million)? By the way: the bridge loans "cost" $13 million in annual interest, so, if they pay the bridge loans this year, interest expense will decline a bit. They also have to do mandatory

[Health123]

It you believe that they can service the debt with fake EBITDA, then why don't you buy the bonds?   38% yield is amazing, don't you think?