Parsad Posted September 28, 2013 Share Posted September 28, 2013 I'm still very confused by the comments that you guys are saying Francis is selling. He still has the same 513,000 shares in the Asia Fund for the last two years ending June 30th, so where are you guys getting your information from? Too many presumptions about why managers are selling without knowing the facts! There was some discussion about Tim selling part of his Rainmaker stake a while ago, but no one knows exactly why, so some posters came to certain erroneous conclusions. When you assume, you know what that means, correct? Don't guess about why managers are buying or selling. You have no idea if it is because the thesis has changed, or they are selling for tax losses, or selling to other entities to get them involved, or simply selling because they may want to retain liquidity or are facing some redemptions. Guess work is not analysis! Cheers! A couple of years ago chou sold from almost 800,000 shares to his current position. That's what someone wrote -- but then i think it passed down the grapevine and info was lost in translation. Yes, that's correct. Over two years ago, he had more, but he has not been selling recently at all. I think when he was selling back then, he was also facing some redemptions, so he was selling to create liquidity. Cheers! Link to comment Share on other sites More sharing options...
gary17 Posted September 29, 2013 Share Posted September 29, 2013 is this the ratio that we are looking for? The Boards of Directors of GVIC Communications Inc. ("GVIC") and Glacier Ventures International Corp. ("Glacier") (TSX:GVC) are pleased to announce that GVIC and Glacier have agreed that GVIC will propose an arrangement (the "Arrangement") among GVIC, GVIC's shareholders and Glacier. Under the Arrangement, Glacier will acquire all of the shares of GVIC not currently owned by Glacier in exchange for common shares of Glacier. Each share of GVIC tendered will be exchanged for 0.0429 common shares of Glacier. Thank you Gary for writing up about the call, if you talk to him again, can you ask him about the exchange ratio for the tax sheltered company that packer asked about? GVIC-GVC.pdf Link to comment Share on other sites More sharing options...
Packer16 Posted September 29, 2013 Share Posted September 29, 2013 Can you still tender your shares or is this like a post-takeover arb where a small amount of firm still trades after the transaction? If you could tender your shares you would think an arbitrage would occur. If you can't tender then the reason for the discount may be that GVC may not pay the same amount today to get the shares as they did in 2006. Packer Link to comment Share on other sites More sharing options...
gary17 Posted September 29, 2013 Share Posted September 29, 2013 The 0.0429 ratio doesn't make sense to me GVC is 1.29 GCT is 0.37 If we use the 0.0429 ratio....... GCT is supposed to be at 0.05 Link to comment Share on other sites More sharing options...
Packer16 Posted September 29, 2013 Share Posted September 29, 2013 How does this company with a coverage ratio of over 8x have a weak financial position. They can pay back all of their debt in 4 years with their free cash flow. Given this I would not be surprised if they refi at or a lower rate they are paying today. Packer Link to comment Share on other sites More sharing options...
shalab Posted September 29, 2013 Share Posted September 29, 2013 How does this company with a coverage ratio of over 8x have a weak financial position. They can pay back all of their debt in 4 years with their free cash flow. Given this I would not be surprised if they refi at or a lower rate they are paying today. Hope it works out for people that bought it. I think you meant OCF ( operational cash flow ), not FCF? They spend a bunch on capex so their FCF isn't that great. They refinanced in 2010 and the rates have gone up since then - also, they are not required to pay down principle now. Something like an interest only loan. The tax shelter stuff is also a risk. I will watch this one as a case study :) Link to comment Share on other sites More sharing options...
Parsad Posted September 29, 2013 Share Posted September 29, 2013 How does this company with a coverage ratio of over 8x have a weak financial position. They can pay back all of their debt in 4 years with their free cash flow. Given this I would not be surprised if they refi at or a lower rate they are paying today. Hope it works out for people that bought it. I think you meant OCF ( operational cash flow ), not FCF? They spend a bunch on capex so their FCF isn't that great. They refinanced in 2010 and the rates have gone up since then - also, they are not required to pay down principle now. Something like an interest only loan. The tax shelter stuff is also a risk. I will watch this one as a case study :) Historically, the have not spent a lot on capex. It's been mostly with the recent Postmedia acquisition, where there was a deficiency of capex for years. I don't think you will see them spend that much going forward. Cheers! Link to comment Share on other sites More sharing options...
Packer16 Posted September 29, 2013 Share Posted September 29, 2013 If they spent only on maintenance cap-ex about 10 m per year. They would generate about 34 m free cash flow over the TTM and only have 116 m in debt. Rates for their type of debt have not gone up they may have gone down due to more liquidity availability and outstanding coverage ratios. Packer Link to comment Share on other sites More sharing options...
ourkid8 Posted September 29, 2013 Share Posted September 29, 2013 I agree and I am staying on the sidelines as well since this is similar of FTR. I thought I was absolutely certain that they can use the FCF from the wire line business and plow it into the next generation internet business. The problem was the wire line business started to precipitously decline faster then they were able to convert individuals to the internet business. Good luck everyone! Thanks, S How does this company with a coverage ratio of over 8x have a weak financial position. They can pay back all of their debt in 4 years with their free cash flow. Given this I would not be surprised if they refi at or a lower rate they are paying today. Hope it works out for people that bought it. I think you meant OCF ( operational cash flow ), not FCF? They spend a bunch on capex so their FCF isn't that great. They refinanced in 2010 and the rates have gone up since then - also, they are not required to pay down principle now. Something like an interest only loan. The tax shelter stuff is also a risk. I will watch this one as a case study :) Link to comment Share on other sites More sharing options...
Packer16 Posted September 29, 2013 Share Posted September 29, 2013 The level of debt on FTR was more than 2x the level you have on Glacier and here you have revenue and FCF growth versus decline at FTR. I do not see debt as the major risk but the ability to grow the information side of the business. Since Glacier is trading at 3 to 4x FCF, there is negative growth in the price. Therefore, if Glacier doesn't grow - 0 percent growth, it still is cheap. Packer Link to comment Share on other sites More sharing options...
shalab Posted September 29, 2013 Share Posted September 29, 2013 Ebitda for gvc has dropped by more than 20% yoy for the first six months - so this is not entirely a zero growth situation. However, I hope this works out well for folks... Link to comment Share on other sites More sharing options...
ourkid8 Posted September 30, 2013 Share Posted September 30, 2013 I was just about to respond... thanks! Tks, S Ebitda for gvc has dropped by more than 20% yoy for the first six months - so this is not entirely a zero growth situation. However, I hope this works out well for folks... Link to comment Share on other sites More sharing options...
Packer16 Posted September 30, 2013 Share Posted September 30, 2013 It depends upon your time frame. If you look over the past 5 years CFO has increased from the mid 20s to the mid 40s. Clearly, this firm does not have a smooth increase in CFs. If it did, it wouldn't be selling at 3 to 4x FCF. The question is the 6 mo decline a bump in the road or the start of a secular decline. I think the former. Packer Link to comment Share on other sites More sharing options...
gary17 Posted September 30, 2013 Share Posted September 30, 2013 So here's what I learned: 1 - No conversion between GVIC Communications and Glacier - that was something done a number of years ago; no conversion can be done presently - so forget GVIC Communications. 2 - Taxes. So as per the public reports, CRA is in the process of reviewing the company's taxes (2008 - 2011). One can look at previous losses that the company has reported for tax sheltering purposes to get an estimate of how much tax is in dispute. This is about 38M. Let's just call it 40M. If CRA issues a notice of assessment - as conservative investors we should assume they will - the company would have to pay 50% first; so that's about 20M. If CRA issues a NOA, the company would challenge the assessment in court. If the company wins, they get 20M back. If the company loses, the total tax bill would be 40M plus taxes outstanding in 2012 - There is every expectation to win, but as conservative investors we should assume they lose the case. The question then is this: is the current market price of Glacier reflecting this tax bill at 20M or 40M (i.e, the company not succcesful in the appeal) or at all? Link to comment Share on other sites More sharing options...
Potato Posted October 1, 2013 Share Posted October 1, 2013 What is the tax dispute related to? Is it the Stressgen takeover? The CRA seems to be picking a few of those tax pool transactions (Superior Plus is also in a dispute over their reverse takeover of Ballard -- well over a year now and still no decision AFAIK). Link to comment Share on other sites More sharing options...
plato1976 Posted October 1, 2013 Share Posted October 1, 2013 Isn't the tax in dispute 20M instead of 40M ? What's your source ? So here's what I learned: 1 - No conversion between GVIC Communications and Glacier - that was something done a number of years ago; no conversion can be done presently - so forget GVIC Communications. 2 - Taxes. So as per the public reports, CRA is in the process of reviewing the company's taxes (2008 - 2011). One can look at previous losses that the company has reported for tax sheltering purposes to get an estimate of how much tax is in dispute. This is about 38M. Let's just call it 40M. If CRA issues a notice of assessment - as conservative investors we should assume they will - the company would have to pay 50% first; so that's about 20M. If CRA issues a NOA, the company would challenge the assessment in court. If the company wins, they get 20M back. If the company loses, the total tax bill would be 40M plus taxes outstanding in 2012 - There is every expectation to win, but as conservative investors we should assume they lose the case. The question then is this: is the current market price of Glacier reflecting this tax bill at 20M or 40M (i.e, the company not succcesful in the appeal) or at all? Link to comment Share on other sites More sharing options...
wknecht Posted October 1, 2013 Share Posted October 1, 2013 GVC definitely looks pretty interesting. Trying to digest the tax situation though, as this is concerning both from the perspective of the reassessment and recurring FCF reductions relative to the recent past where they were not paying taxes. It seems the CRA issued a Notice of Reassessment to GVIC back in 2007 also (for tax years 2002 through 2005). After scanning filings/PRs, I couldn't figure out if this was related to a similar situation as the current one or locate the conclusion. Anyone aware of the details of this? Off topic: I like the ability to search full text in EDGAR. Is there a similar feature in SEDAR I'm missing? Link to comment Share on other sites More sharing options...
lessthaniv Posted October 1, 2013 Share Posted October 1, 2013 pull up that actual document. "cntrl F" will bring up a search box. put your words and it will search that document. Link to comment Share on other sites More sharing options...
wknecht Posted October 1, 2013 Share Posted October 1, 2013 pull up that actual document. "cntrl F" will bring up a search box. put your words and it will search that document. I wasn't clear. I mean the ability to search the last several years of filings at once, with the option to filter by company among other things (https://searchwww.sec.gov/EDGARFSClient/jsp/EDGAR_MainAccess.jsp). It's much more convenient than going document by document. Link to comment Share on other sites More sharing options...
gary17 Posted October 1, 2013 Share Posted October 1, 2013 I don't want to comment on the source but if one does enough digging should be able to verify the tax liability. I think this is a great long term investment myself, just not sure how to value this with the potential tax bill and what would be a good entry point... was hoping someone more knowledgeable on valuing this kind of company could comment. Packer. IF we have to assume this 40M tax bill materialise, how much do you think the company is worth? Thanks. Link to comment Share on other sites More sharing options...
Packer16 Posted October 1, 2013 Share Posted October 1, 2013 It would bring the value down but I doubt the tax liablity will occur because there is no reserve for it and PwC is thier auditors. If the auditors thought it was going to happen or had a material chance of occuring a reserve woul be on the balance sheet. Packer Link to comment Share on other sites More sharing options...
Mephistopheles Posted October 3, 2013 Share Posted October 3, 2013 Even if they have to pay the full 40M, that's just an additional year of FCF. So it would be 5 years of FCF to pay down all debt instead of 4. Link to comment Share on other sites More sharing options...
muscleman Posted October 3, 2013 Share Posted October 3, 2013 Even if they have to pay the full 40M, that's just an additional year of FCF. So it would be 5 years of FCF to pay down all debt instead of 4. As parsad pointed out, the key question is whether the recent FCF 20% drop is one time event or it is in a sequential decline. I don't have a position yet, and I am still looking into this company. If the FCF can sustain, it will be a no brainer. Link to comment Share on other sites More sharing options...
ourkid8 Posted October 6, 2013 Share Posted October 6, 2013 Are you guys buying this on the TSX or OTC? Is there any difference between the two besides the ome on the OTC is just under 2% cheaper? Tks, S Link to comment Share on other sites More sharing options...
krazeenyc Posted October 7, 2013 Share Posted October 7, 2013 Are you guys buying this on the TSX or OTC? Is there any difference between the two besides the ome on the OTC is just under 2% cheaper? Tks, S OTC is in USD (so it's not actually cheaper) and is much less liquid. I'd suggest TSX. I haven't bought it yet, but I'm still looking into it. Link to comment Share on other sites More sharing options...
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