Abdalla Al-ayrot
Long only, deep value, special situations

QC Holdings: Asymmetric Risk/Reward

Investment Summary

The shares of QC Holdings(NASDAQ:QCCO) trade at a substantial discount to its peers and at a price-to-tangible book value multiple of 0.61. This is partly due to the temporary removal of the quarterly dividend, due to a prohibition by the amendment that the company entered into with its lenders following the company's failure to comply with a financial EBITDA covenant. The company failed to comply due to the closure of several underperforming branches. The amendment furthermore converted some of the company's Revolving Credit Facility ("RCF") to a term loan and limited the company's ability to return capital to its shareholders until it has fully paid back the term loan. The term loan is planned to be...

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