djohn
4 days ago
And we're stuck with a 7% note to pay. We better get more business because if you run the numbers
Yearly interest payments
$125 million at 1.25% = $1,562,500
$160 million at 7% = $11,200,000
Difference $9,637,500
That means we have to do about $32 million more in revenue to pay for the higher interest payment(That's if Avid does a 30% margin)
Last quarter they did 14% margin which would require a $69 million increase in revenue to pay the new interest payment
westjtter
5 days ago
Well, to be fair, the entire market pulled back towards the end of the day, so unlike some days, the stock was trading very much like the overall market today. Avid Stock price appreciation percentage still bettered the Russell 2000 ave for the day....so all in all, a pretty good positive.
Now will the share price find a way into the $12's in the coming week or two(or heaven forbid, back into the $10's or)??? I am not sure...we will see!
westjtter
6 days ago
IMO it is going to be tough to move much higher until the company demonstrates that they will be able to make a profit(not just build on their backlog)by actually making a dent in their excess capacity! The current convertible financing agreement is set up much more to favour the issuer of the debt than the recipient with a low strike price($9's) and a high 7% interest rate especially in light of the fact that we are now entering a longer term time line of falling interest rates....this refi was done at the height of the interest rate cycle.
Now I have not seen the financing document, but I would hope(and believe) that management would have the option to pay off the loan before its maturity date....especially with rates falling going forward?
So if I was Daniel Hart, I would be searching to see if there is a better deal out there, as in a lower rate with a higher strike price on the convertible. The company was in an emergency type situation(although I will not and do not understand why the original loan had to be paid back immediately which is a little bizzare to say the least) and so had to make a deal that may not have been the greatest but was one they were forced to make out of necessity.
So basically cutting a deal with a sort of White knight financier to negotiate some kind of a financing vehicle that would provide enough funding to pay off the original agreement at much better terms! This would certainly make sense to me!!
Now it may be a little early, but perhaps in 12-18 months, Avid will be in a stronger position and rates will be probably be 1.5 to 2 points lower and this would really help their interest costs.
Or perhaps just have the White Knight buy us out???
Some things to ponder while we seem to be stuck in the current share price range.