Author Topic: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?  (Read 123378 times)

rb

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #250 on: June 27, 2018, 07:18:13 PM »
Money laundry going on at Casinos? This is ground breaking stuff. Who knew?  ::)


doc75

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #251 on: June 27, 2018, 07:33:27 PM »
Quote
New Parq Casino is an outrageous land deal—public assets leased way below market to a 2-bit US casino player, then millions in construction subsidies.

I don't think is is uncommon practice for big city redevelopments. Thats the way it happens across the globe.

Could be.  But that wasn't the part that seemed sketchy to me.

RichardGibbons

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #252 on: June 28, 2018, 10:01:22 AM »
Money laundry going on at Casinos? This is ground breaking stuff. Who knew?  ::)

In case it's not obvious to you, the reason it matters isn't that it's money laundering in casinos. It's that the provincial government is making it one of their top five high-profile political issues.

If a chunk of a business's revenue is derived from illegal activity, and the government says, "This is the particular illegal activity we're going to focus on and eliminate", then some might consider that news relevant to future of the business.

Cevian

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #253 on: June 29, 2018, 01:44:48 PM »
I really hope this isn't going to end up being the perfect case study for a falling knife one day. I can't believe there are sellers are this price but there doesn't appear to be any sign of a bottom.

doc75

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #254 on: June 29, 2018, 02:45:55 PM »
I really hope this isn't going to end up being the perfect case study for a falling knife one day. I can't believe there are sellers are this price but there doesn't appear to be any sign of a bottom.

I fondly remember thinking that at $1.99.   The B prefs are at a 13% yield.

Don't know if it's steady selling from a large holder, or simply a lack of any news that would trigger a change in direction.  All the obvious stuff is negative:  DPM is down 10% from highs,  ECS is down heavily over the past few months,  money laundering is becoming a big story re: Parq, and not a hint of insider purchases as it plumbs new lows.   








doc75

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #255 on: July 04, 2018, 09:29:49 AM »
The market cap of the B and D prefs is now $37m + $18m.  The E's are essentially debt with a $83m face value.  So assuming the E's get paid off in full ahead of the B's and D's, the market is valuing Dundee's liabilities at around $138m.

This is against a portfolio consisting of:
$118m in shares of DPM (today's price)
$16m in shares of ECS (today's price)
$50m in "other" publicly traded securities (prices at Mar 31)
a bunch of operating entities and private investments (hard to value, but presumably nonnegative)

For some reason the market has very low expectations of the Goodmans (...turns to look at 5 year stock chart). 


sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #256 on: July 04, 2018, 10:43:00 AM »
Been buying B's & D's and more common in low $1.60's. Might visit Parq in next week to see how it is doing at height of tourist/holiday season.

doc75

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #257 on: July 05, 2018, 02:10:55 PM »
FYI: Just found this today.  Possibly linked to the recent weakness in the prefs etc. 

---------------------------------------------------

22 Jun 2018
$291 million of debt rated
Toronto, June 22, 2018 -- Moody's Investors Service downgraded Parq Holdings Limited Partnership's (Parq) corporate family rating (CFR) to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD, and senior secured term loan ratings to B2 from B1. The ratings outlook was changed to negative from stable.

"Parq's CFR was downgraded and the outlook changed to negative to reflect materially weaker first quarter 2018 results than we expected, weak liquidity and expected leverage of 14x, which may improve, but will likely be maintained above 10x in the next 12 to 18 months", said Peter Adu, a Moody's Vice President and Senior Analyst.

Ratings downgraded:

Corporate Family Rating, to Caa1 from B3

Probability of Default Rating, to Caa1-PD from B3-PD

$246 million senior secured first lien term loan due 2020, to B2 (LGD3) from B1 (LGD3)

$45 million senior secured delayed draw term loan due 2020, to B2 (LGD3) from B1 (LGD3)

Outlook Actions:

Outlook, Changed to Negative from Stable

RATINGS RATIONALE

Parq's Caa1 CFR is constrained by: (1) Moody's expected leverage (adjusted Debt/EBITDA) around 14x for its first year of operation (2018) and the likelihood that the metric will be maintained above 10x in the next 12 months thereafter; (2) heightened refinancing risk in December 2020; (3) weak liquidity; (4) single location and ramp-up risks associated with its new casino and hotel resort; (5) saturation of gaming and lodging facilities in the Lower Mainland of British Columbia; and (6) small scale relative to key Canadian peers. The company benefits from: (1) its attractive location; (2) Marriott Hotel's brand strength, and (3) the demonstrated willingness of its private owners to inject equity for cost overruns and delays in the past, which may continue, but is not assured.

Parq has weak liquidity. The company's source of liquidity is its cash balance of C$21 million at Q1/2018 while it has uses of about C$14 million in the next four quarters. The company has no external revolving credit facility and Moody's expects free cash flow of negative C$10 million and C$4 million of term loan amortization in the next four quarters, which leaves minimal excess liquidity. Parq has a C$15 million minimum liquidity covenant that will be breached in 2018. However, Parq's private owners have injected capital to fund cost overruns and delays during the construction phase of the resort. Moody's believes the owners will have to inject liquidity into the company to keep it operating. Parq has limited ability to generate temporary liquidity from asset sales.

The negative outlook considers that Parq's liquidity will be insufficient to support its operations in the next 12 months. The negative outlook also signals Moody's default concerns as the company may not be able to expand EBITDA or repay debt to reduce leverage meaningfully prior to the maturity of its $291 million in term loans in December 2020.

The rating will be downgraded if EBITDA and free cash flow do not expand meaningfully or if Moody's perceives that there is increased risk of a debt restructuring or default. The rating will be considered for upgrade if the company is likely able to maintain adequate liquidity and sustain leverage below 8x (14.1x expected for 2018) and EBIT/Interest above 1x (0.1x expected for 2018).

The principal methodology used in these ratings was Gaming Industry published in December 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Parq Holdings Limited Partnership, headquartered in Vancouver, British Columbia, owns a new 775,000 square foot casino and hotel resort in downtown Vancouver. Parq is privately-owned by Dundee Corporation, PBC Group and Paragon Gaming (45.9%, 32.2% and 21.9% respectively). Revenue for the two quarters of operation, ended March 31, 2018 was C$71 million.
« Last Edit: July 05, 2018, 02:21:42 PM by doc75 »

Cardboard

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #258 on: July 05, 2018, 03:00:06 PM »
What about $78 Brent for the Chad venture?

The whole thing is retarded, just like for oil stocks. People find plenty of excuses not to buy and they foresee the next 5 recessions and 2 depressions. Where is skepticism in the S&P or TSX?

Parq is prime Vancouver real estate!

Bought some DC.PR.B today and was close to get more common.

Cardboard

doc75

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #259 on: July 05, 2018, 03:40:42 PM »
What about $78 Brent for the Chad venture?

The whole thing is retarded, just like for oil stocks. People find plenty of excuses not to buy and they foresee the next 5 recessions and 2 depressions. Where is skepticism in the S&P or TSX?

Parq is prime Vancouver real estate!

Bought some DC.PR.B today and was close to get more common.

Cardboard

I'm not saying there's no value here. But the Parq downgrade does indicate that refinancing is not going to be easy.  Things aren't looking great for this year, and Dundee may find themselves forced to put in more capital than expected.   I was hoping they'd de-risk that project considerably in the near term.

With regards to the Chad venture.   Their carrying value is pretty high on their balance sheet, based on a 65% chance of commercial cash flows from Doba and 45% from Block H.   I don't know enough about oil or the project to know whether these are reasonable assumptions.  Maybe you've looked into it?