Post by
Goldbuggy1 on Mar 31, 2016 7:18pm
Paying Off Debt!
With a Market Capital of about $220 M and having $195 M in Debt, I think most would agree this debt load is too much. But then people do buy houses for $220,000 and carry a mortgage of $195,000 and keep up with mortgage payments, so it is not like this can't be done. Real Estate can also drop in value from one year to the next but overall it is a positive investment. So perhaps a better terminology would be to say that it would be more desirable if the company debt load was lower. So how does this company lower that? In the past since September 2004, this company has either issued Debentures, which they did 2 times, or issue stocks, which they did 6 times including the IPO, to pay off debt. In this regard they raised a total $316. M. Add in the $196 M in debt they have now and you end up with a total of $512 M. Plus all the profit they ever made from these stores from the very beginning. So how would this company now pay off this $196 M Debt Load? Unlike a Mortgage they are just paying off the interest now. Could they pay this off from this extra income they make now? Sure! If then never planned growing anymore and were willing to wait 15 to 20 years to do that. How about more Debentures? That may be possible but with present Interest Rates they would still be paying the same as the Bank Loan, or maybe more, so no benefit in that either. So it looks like the only other option is to sell more shares, which they have done 6 other times before. Do you want to know about some of the strange things that happen when they sell more shares? When selling shares it puts money right in the pocket of the company with no further Interest Payments or Obligations to make. Except maybe Future Dividends which they can cut at any time. When selling shares it also does not effect Gross Sales. When LIQ sold about 4 M shares last December 2014, for the year 2015 Sales were up. That is good for Executive Bonus I suppose because not all of there bonuses are tied up in Stock Options. So who does selling more shares effect then? It effects You! The Shareholder! As now there are more people eating at the table for almost the same amount of food. Do you know at one time this company actually did have Earnings per Shares of over $1.08. But now they would be lucky to have $0.57 a share and even that is adjusted earnings. Also why after 5 years they have a 51% share price loss. So this is what selling shares 6 times can do to a Shareholder. They take food off of your table. Great to have increases in Sales but if you can't turn this into a profit for Shareholders, what good is that to you? So with this new $196 M in debt how long will it be before they issue a bunch of new shares to sell? Even at this low price. After all, and like the CEO just said, they still enjoyed a 5% Sales Growth over the past 5 years. But I bet he cringed when he saw this 51% Share Price Loss over the past 5 years come up on the screen also. Too bad they didn't ask questions about that. But then they never do with the CEO's. Most times they don't have a clue anyway.