Thursday, March 12, 2015

Titan Bonds Drop After Chairman's Comments

 Titan Machinery Chairman David Meyer stated Monday:
  • "The Company is working with the lenders in its bank syndicate with respect to its expected noncompliance with the current minimum income before income tax covenant as of the end of its January 31, 2015 fiscal year. "

Meyer went on to say :
  • "The Company anticipates amending this covenant associated with this credit facility effective as of the end of its January 31, 2015 fiscal year and for future periods, and therefore does not anticipate being in violation of any covenants as of January 31, 2015."
The bond Meyer is referring to are the $150 million convertible notes ($43 convertible price) with Wells Fargo in an underwriting completed in April 2012. Since the the underwriting 3 years ago, Titan Machinery balance sheet, income statement and cash flow statement have all deteriorated significantly causing Wells Fargo to amend the covenants on the bond 5 different times. 
THE RISK of default if Wells Fargo Does NOT Amend Covenant for 6th Time.

The Chairman "anticipating" that the lender will amend the Covenant because the company is expected to be in noncompliance.
  •  Does the lender, Wells Fargo, feel the same way?
  •  Do bond holders and the public deserve to hear what Wells Fargo has to say regarding this non compliance?
  •  Will Wells Fargo also comment on this issue?

The boiler plate Forward Looking Statement disclaimer was below Meyer's prepared statements made on Monday afternoon to protect him in case his anticipation does not come to fruition.
Also Included:
  •  "The Company’s risks and uncertainties include, among other things, a substantial dependence on a single distributor"
  • " the uncertainty and fluctuating conditions in the capital and credit markets,"
  • " disruption in receiving ample inventory financing"

Titan Machinery (NASDAQ: TITN) stock closed yesterday at a new year to date low @ $12.21. Shares opened Monday morning @ $14.91 and are now down 18% in last 48 hours.
On Monday after the close the company released preliminary FY2015 annual financials for the year ending January 31,2015. Titan usually reports year end numbers in April, so the early release came as a surprise to Wall Street and shares were halted. Tuesday morning the stock traded at a new year to date low @ $11.19.

I blame The company's poor financial condition on GREED AND RELATED PARTY TRANSACTIONS 

Since the Warning 2 years ago,  the S&P500 Index has advanced over 30% while Titan Machiney Shares have declined 60%


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