Hi all,
Yup, this is bad! I am sorry if it took so long for my reply gloomy, but i wanted to look at the info carefully, and once i did that i wanted to get rid of my position before i responded....
There had been coments on this forum about the loan to buy ss, and the high interest rate they had to pay for it (18%). There was not a word on earnings covenant though... Yes, it was a bad idea to buy ss. Or at least they paid way to much for it! ss was supposed to double the buisiness, but it did not deliver... If we look a litle deeper in the numbers, we can see that con-space is not realy growing. We did reach 9.3M of sales of wich ss cotributed for 4.1M, leaving con-space with 5.2M... compared with last years 6.25M, it's actualy a drop (about 16%)... As for ss, they contributed 4.1M for a hole year, compared with 1M for 3 months... I guess it's about flat. So they had to give 50% of our conpany away... (to date) It could be as much as 74% of the company they have to hand out to the lender (turret oy ab)... If you where looking forward to the company reaching the $ mark, you are now looking for the 0.50$ mark... (and may be looking for the 0.26$ mark) And they still have 2 other creditors with wich they are negotiating because they also default with them ( their bank, and the vendors of ss).( so may be we are hoping for them to get back at the 0.15$ mark) Their issuer buy back plan was but a smoke screen to try to please us, or keep the price a litle higher... Thay did not buy back one share to date, and it's obvious they cant buy back any in the short term... May be they will around 1 or 2 cents.... But what is worth reducing dilution 5%, when you have to increase it as much has they did?
I feel bad for M&M Swanson and Ibettson and their retirement... I would like to quote their last press release:
"It's indeed been a tough year but the markets for our products are not diminishing. We continue to be contacted by new customers with new uses for our products. Our design team has an exciting list of new product developments. We're not sitting or taking breather, we're working harder to meet the growing requirements for our products. As we proceed into 2009 we are seeing the positive signs of our new initiatives and we are convinced that we will succeed," concluded Swanson.
I dont believe they are sitting or taking a breather, i think they got in to more than they could handle, and are desperatly trying to keep their necks above the water line and preserve their employees jobs. I hope the design teams efforts will bare fruits, and that they wont have to scrap another 1M in development... I hope the market for your products are not dimishing... But your ability to get your products to that market has taken a beating.. You cant be growing a conpany when you are relocating, merging or doing negociations with creditors.
I wish the best for con-space, their management, employees and share holders. I may even buy back my position if and once they turn things around... I sold because i am betting that this will take place at a lower price, and further in time.
Take care all and best of luck!
Cef
p.s. i will keep an eye on con-space just the same!
