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pe221749

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  • Cerberus Thinks Supervalu Is A Super Value [View article]
    All the negativity is priced into the stock. Whats interesting is the interest in supermarket real estate. Loblaws is spinning of their 35MM or so of square feet into a REIT that will raise about $7BN. Now imagine SVU's 24MMish or so of real estae. I bet USA real estate would generat more value than canadian real estate. The subsidiaries of SVU are profitable and should generate future value for all those that wait. Remember Winn Dixie - it got sold in spite of all the market negativity!!
    Jan 7 04:10 PM | Likes Like |Link to Comment
  • Supervalu: Should I Stay Or Should I Go? [View article]
    Deepvaluelover - please help me understand your logic? Perhaps you are right and I am wrong?
    Dec 5 02:38 PM | Likes Like |Link to Comment
  • Supervalu: Should I Stay Or Should I Go? [View article]
    Richard, They are servicing their debt IE interest payments quite easily. EBITDA less interest is a basic FCF measure that is used.

    Regarding default, I dont think from reading all the indentures and credit agreements that there is a default possibility "until" a maturity comes up.

    So I am confused at what numbers you are using but would like to learn or be corrected if I am mistaken. But I am pretty sure what I mentioned above is conventional.
    Nov 19 02:32 PM | Likes Like |Link to Comment
  • Supervalu: Should I Stay Or Should I Go? [View article]
    Richard, What numbers would you like? LTM EBITDA of approx 1.6bn is still servicing debt interest and capex and ability to delever. But lets think about something else - grocery stores is really about location and its regional. The lack of CMBS and developer financing will be a major issue in future development of shopping centers. This is a fact. Hence, replacement cost of SVU is extremely high - Lets keep this simple as possible - SVU owns about 40% of realestate ranging in size from 40k-60k square feet.

    1100 stores times 40% is 440 owned stores x 50k (avg sq feet) or 22MM owned sq feet. Now with Save - 40% times 400stores or 100 SAVE stores multiplied by 15k which is 1.5MM owned sq feet for a grand total of approx 24MM SVU owned real estate. If you try to develop all this meaning building a grocery store from bottomes up its probably in range of $300-400/sq feet nationally. But lets use $200 or $250 which is around $5 - $5.5 BN of replacement value. This is an example of financial engineering that many PE shops are salivating over - buy and break up. But Sales/SVU said recently they are investigating the breakup piece by piece themselves.....
    Nov 16 02:30 PM | Likes Like |Link to Comment
  • Supervalu: Should I Stay Or Should I Go? [View article]
    Richard, thank you for pointing out Fitch's research. But default can only be triggered by breaching covenants or lack of ability to repay due maturities. Hence, I believe Fitch is probably wrong. Just b/c a company has high debt doesnt always mean default. If I may, look at home mortgages - 80% debt and 20% down payment.. As long as no maturity is coming up and interest is being serviced and covenants are light, its ok. Leverage and lots of it usually spook the market but in this case SVU still has assets it can mortgage......Google KIMCO and their comments about the didstressed ABS stores they picked up in 2006 - gift that keeps on giving.
    Nov 14 05:05 PM | 1 Like Like |Link to Comment
  • Supervalu: Should I Stay Or Should I Go? [View article]
    CEO has strong incentives to sell and create shareholder value. Read his contract and his its worded. Very shareholder friendly. In terms of bankruptcy, how will this occur if there are no covenants? I think many dont understand how a company can or is forced to file Chapter 11. In this case, its very remote....Remeber this use to be an investment grade company where the bonds are very borrower friendly and they can always raise liquidity via the CMBS market as they own 40% of their real estate. Also note, that Cerberus acquired old ABS crappy stores and turned them around. So once some of the assets are removed from the conglomerate or holding company structure they should perform. Customers visit supermarkets over 10x compared to visiting a super center like WMT or costco..... They still generate much foot traffic and are a desire to be an anchor in must shopping malls.
    Nov 13 03:50 PM | 1 Like Like |Link to Comment
  • The Real Natural Gas Production Cost [View instapost]
    Why did you get banned. I trully enjoy reading your articles. Hopefully, you can tell them to take the ban off!
    Nov 1 02:22 PM | 2 Likes Like |Link to Comment
  • Supervalu: A Comeback You Don't Want To Miss [View article]
    The problem is banks took collateral on their debt facilities as opposed to believe in the future cash flow of the company.
    Jul 25 02:48 PM | Likes Like |Link to Comment
  • The Bull Case For Supervalu Bonds [View article]
    The new debt facilities use to be cash flow loans and now they are asset backed which might entail that the banks believe that SVU might have future cash flow problems. You only take collateral when the underlying business profitability is in question. This is going to be very interesting.
    Jul 25 02:36 PM | Likes Like |Link to Comment
  • The Bull Case For Supervalu Bonds [View article]
    Whats interesting is the bonds are trading like this company is Chapter 11 as many rumors of bond holders gathering together. And ex - Save and Independent business, the retail business stinks and not even cash flow positive. So would management want to get rid of the crown jewels and be left with a pig. Further food for thought is I think I saw the management team received stock at 98 cents - need to check SEC filings though. If they have stable FCF, dividend would of stayed and they could of issue stock to pay down debt.. Interesting puzzle here.
    Jul 24 05:27 PM | Likes Like |Link to Comment
  • Which Coal Miner Is The Next To Bankruptcy Protection? [View article]
    Your analysis of why companies file for bankruptcy is atypical. Companies file b/c of default - and default is caused by --- (do some better research other than numbers from yahoo or msn.
    Jul 11 04:20 PM | 1 Like Like |Link to Comment
  • James River Is Navigating The Coal Slump Masterfully [View article]
    Now that PCX management team wants to own a larger stake (typical for Chapter 11) whats on the horizon for JRCC as their converts and bonds are pricing n Chapter 11 and EBITDA will probably decline in 2013 unless pricing firms up.
    Jul 9 05:04 PM | Likes Like |Link to Comment
  • Patriot Coal: The Vulture Has Landed [View article]
    Springer - Why would JRCC file for Chapter 11? Its a different than PCX? Or am i missing something
    Jul 9 04:55 PM | 1 Like Like |Link to Comment
  • Why I Am Sticking With Patriot Coal [View article]
    Patriot Coal Prepares For Bankruptcy: Report
    http://bit.ly/Mh1K09
    Jul 9 04:53 PM | 1 Like Like |Link to Comment
  • James River Is Navigating The Coal Slump Masterfully [View article]
    Interesting write up on JRCC. Did you know bonds are priced in the 60-70s.

    Whats also interesting is the "consensus" on China and India. I agree but we don't "YET" have the ability to export our coal. This was highly specified in the Peabody analyst day. CEO said yes china and india need our coal but it will be tough to get it to them. Macro story yes, but when it comes to logistics its very hard..
    Jun 28 06:03 PM | 1 Like Like |Link to Comment
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