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Alan R. Goozner During the 1994 Peso crisis, I started an e-mail newsletter. This followed from my comments to Mexican interest groups and list servers on the rapidly expanding Internet. The newsletter became a copyright publication : "The Mexican Commentary." This had a limited paid... More
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  • Financing News 1 comment
    Sep 21, 2009 11:52 AM | about stocks: GMK
    Looks like there is some positive progress on financing the debt incurred from derivative trading last year.  The worry was fear of bankruptcy but with this news - progress on the negotiations seems to put that worry aside.

    The details need to be analyzed.

    My biggest worry is the convenants on paying a dividend.  The restrictions may be severe.  I notice a 7-1/2 year term on a good portion of the debt.  A restriction may be imposed until the loan is completely paid.

    Mexican companies like to pay dividends.  The history of this company is just to do that and was previously considered a blue chip to the internal funds twenty years ago.

    All in all - the speculation continues but with less downside fear in the mix.

    Positive developments include increased milling margins from the current bumper corn crop.  But how much will be taken by increased GA costs now with a hefty interest payment going out the door.

    I currently rate it as a hold but will buy on any pull back from traders celebrating the good news to take some profits on the stock.

    www.eluniversal.com.mx/notas/627744.html

    I currently hold positions in this stock for my family accounts that I manage.
    Stocks: GMK
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  • MexCom
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    Author’s reply » I added significantly to my position today. The continued profit taking after the financing news and the overall weak market with fairly low volume on the Bolsa pointed to no panic selling. To me it was a grand opportunity to add to my position.

     

    The pencil pushers are trying to figure out how the new financing will effect profits but the exercise would be futile. For the long term the stock is terribly undervalued. After they are done figuring out the valuation - the market would probably push it up half way to their target while they contemplate their strategy.

     

    Nice rally at the close off the bottom. This could be the bottom.
    24 Sep 2009, 04:07 PM Reply Like
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