- The new investor bought 15.8mm shares at $0.90 per share and has the option to buy another 27.4mm shares at $0.90 within 6 months of the initial investment.
- As part of the terms of the investment, the CEO of the company has an anti-dilution provision. If APP reaches stock price performance goals of $3.25 by 2013, $4.25 by 2014, and $5.25 by 2015, the CEO receives a total of 39.7mm additional shares.
- The company’s 2010 sales were $533mm. Costs are high in both Cost of Goods and Selling / General & Administrative costs, but with some cost-cutting measures the company may be able to return to profitability.
- Total debt is well-collateralized:
Long-Term Debt as of Year End 2010: Total $139mm
Revolving Credit Facility at Bank of America, $75mm, $53.4mm is drawn, due July 2012
Term Loan at Lion, $81.2mm matures Dec 31, 2013
Assets as Collateral for Debt (as of Year End 2010): Total $287.3mm
Accounts Receivable $16.7mm
Property and Equipment $85mm
- The company may now have enough time to return to profitability before cash runs out. The current rescue investment is for $15mm immediately plus an additional $25mm over the next 6 months at the discretion of the investor, for a total potential cash infusion of $40mm this year. Total cash usage for operating activities was $32mm in 2010, although it should be noted that in 2010 the company reduced inventory by $37mm (20%).
We will be monitoring the situation closely to see if it makes sense as an investment.