{"id":822,"date":"2010-04-29T15:00:48","date_gmt":"2010-04-29T20:00:48","guid":{"rendered":"http:\/\/www.holypotato.net\/?p=822"},"modified":"2012-11-18T13:43:43","modified_gmt":"2012-11-18T18:43:43","slug":"priszm-hell-in-a-handbasket","status":"publish","type":"post","link":"https:\/\/www.holypotato.net\/?p=822","title":{"rendered":"Priszm: Hell in a Handbasket"},"content":{"rendered":"

I was bullish on Priszm (QSR.UN)<\/a> for a long time<\/a> the last two years<\/a>, the thesis being that even in a recession, people still need their 11 herbs and spices fortnightly, and that there were fairly decent levels of cash being generated, even after the declines that were taking place. Unfortunately, I ignored the little voice that had lost confidence in management after whip-sawing their distribution<\/a> all over the place every few months (3 cents! 10 cents! 5 cents! 1 cent… nothing!). <\/p>\n

The last annual report was 80-some pages and put up as a nice PDF… this last quarter’s was faxed and then scanned or some godawful thing. No conference call, either, which I can only assume is bad news. <\/p>\n

Buried in that tough-to-read garbled mess is a little line saying that their current lender (who is never identified in anything I can find) will not be renewing their loan in December. They find a new lender, or die basically. With a new loan, their debt:equity will be over 1, so it may be hard to find a lender, or at least get an interest rate that keeps them in business.<\/p>\n

Now, last year they generated $0.50\/share in distributable cash. Even with negative tangible book value that’s pretty damned sexy for a stock trading at $0.89.<\/p>\n

However, they’ve been a steaming pile of failure the last few years. They whipsawed investors around with the distribution; they’ve provided zero clarity on the issues of renewing this loan; they haven’t announced their plans for post-2011 (perhaps because they’ll be out of business?); and of their earlier plan to sell 147 under-performing locations, only something like 21 actually got sold.<\/p>\n

If they do manage to find attractive refinancing (and renegotiations of their franchise agreements) that lets them go back to generating (and distributing!) cash, then I may get consider getting back in, but for now, they look to be too close to the brink of bankruptcy for me, soI’m taking my 86% loss and getting out.<\/p>\n

And remember: you don’t have to make it back the same way you lost it.<\/p>\n","protected":false},"excerpt":{"rendered":"

I was bullish on Priszm (QSR.UN) for a long time the last two years, the thesis being that even in a recession, people still need their 11 herbs and spices fortnightly, and that there were fairly decent levels of cash being generated, even after the declines that were taking place. Unfortunately, I ignored the little […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[],"_links":{"self":[{"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/posts\/822"}],"collection":[{"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=822"}],"version-history":[{"count":0,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/posts\/822\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.holypotato.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=822"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=822"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=822"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}