Author Topic: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?  (Read 123390 times)

Lakesider

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #290 on: July 17, 2018, 04:02:49 PM »
Might be a dumb question... But,

What happens when a company cant pay the maturity for cumulative preference shares? I'm guessing that they just owe the money to the holders as they would with a dividend? Preventing the commons from receiving payments until obligation is met?

Thanks


Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #291 on: July 17, 2018, 04:18:53 PM »
Might be a dumb question... But,

What happens when a company cant pay the maturity for cumulative preference shares? I'm guessing that they just owe the money to the holders as they would with a dividend? Preventing the commons from receiving payments until obligation is met?

Thanks

I think in a case where the preferred has matured it needs to be paid off or extended by a vote. Otherwise the company would be taken into bankruptcy.

SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #292 on: July 18, 2018, 03:14:14 AM »
Might be a dumb question... But,

What happens when a company cant pay the maturity for cumulative preference shares? I'm guessing that they just owe the money to the holders as they would with a dividend? Preventing the commons from receiving payments until obligation is met?

Thanks

Also, the DC.PR.E, don’t “mature”. It’s just that holders are allowed to force the company to buy them back. If history is any guide, not every holder will do so.

I think in a case where the preferred has matured it needs to be paid off or extended by a vote. Otherwise the company would be taken into bankruptcy.
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petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #293 on: July 18, 2018, 05:32:39 AM »
Thanks. Do you have a view on whether they are any good?

It's interesting they've chosen to come back. That alone might say something.

No, not a clue. You'd imagine Dundee wouldn't hire them back if they weren't capable.  It bodes well that none of them is a Goodman.

True. But then I wouldn't have imagined that they'd have done half of what they've done over the years so sadly my imagination is not a good analytical tool ;)

petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #294 on: July 18, 2018, 05:34:07 AM »
Might be a dumb question... But,

What happens when a company cant pay the maturity for cumulative preference shares? I'm guessing that they just owe the money to the holders as they would with a dividend? Preventing the commons from receiving payments until obligation is met?

Thanks

I think in a case where the preferred has matured it needs to be paid off or extended by a vote. Otherwise the company would be taken into bankruptcy.

I think the prefs also become voters in a default situation which could be interesting.

SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #295 on: July 18, 2018, 01:10:58 PM »
Wouldn’t they just pay with common priced at $2 in that scenario? Lots of new shares issued but cash is saved and no default.
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sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #296 on: July 18, 2018, 01:56:27 PM »
Wouldn’t they just pay with common priced at $2 in that scenario? Lots of new shares issued but cash is saved and no default.

Right now value of their holdings in Dundee Precious Metals = $109 million while Series 5 prefs liability = $90mm. Kind of premature to be discussing default but then again with DC's luck & general competence there is always need to worry about mine catastrophes, nationalization or anything else that can sink a junior gold miner.


Latest article I can find on TaurX of which I believe Dumbdee has a 4% stake (hopefully they have not put any more in on subsequent financings)....

Casino-Backed Startup Eyes Alzheimer's Cure Worth $2.5 Billion

By Joyce Koh  and Livia Yap

March 1, 2018, 8:24 PM EST

 *TauRx will look at options including IPO if trial successful

 *Big pharmaceutical companies have exited or failed in field


It hasn’t found a cure for Alzheimer’s disease and doesn’t have any drugs on the market. Yet, TauRx Pharmaceuticals Ltd. says the company’s worth about $2.5 billion as it embarks on its latest trial funded by shareholders including casino operator Genting Bhd.

If the trial proves successful, the Singapore-based company plans to apply to European and U.S. regulators for conditional or accelerated approval of its drug, TauRx Deputy Chairman Tay Siew Choon said in an interview in the city-state last month. It will also need to raise about $150 million to conduct a more comprehensive phase III trial, though at that point, it would evaluate options including an initial public offering or sale.


TauRx is pressing ahead in a field that has seen many of the largest pharmaceutical players from Pfizer Inc. to Axovant Sciences Ltd. exit or fail. Just last month, Merck & Co. said it will end a trial of its most advanced Alzheimer’s drug while Biogen Inc.’s shares tumbled after saying it was making changes to its trial. TauRx disappointed investors in 2016 when it said its LMTX drug failed to meet a primary goal of slowing the rate of disease progression when taken in combination with other Alzheimer’s drugs.

“We have consistently seen that our theory works, and there’s no reason to give it up,” said Tay. “Shareholders’ support and faith in us has not weakened.”

On top of a $71 million rights issue in October to fund the current trial, TauRx had already raised more than $500 million since 2002, according to Tay. The last financing round in 2016 valued the company at about $2.5 billion, he said. Billionaire Lim Kok Thay’s Genting invested $112 million in TauRx in 2012, becoming its biggest shareholder with about a 20 percent stake.

TauRx has been recruiting patients since November for the current trial, where it plans to test its drug on 200 patients with mild Alzheimer’s disease who aren’t taking any other medication. The results are expected in early 2019.

https://www.bloomberg.com/news/articles/2018-03-02/casino-backed-startup-eyeing-alzheimer-s-cure-worth-2-5-billion

Lakesider

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #297 on: July 18, 2018, 02:33:54 PM »
Wouldn’t they just pay with common priced at $2 in that scenario? Lots of new shares issued but cash is saved and no default.

I wasn't sure of the answer so I asked my CFA tutor, who seemed to think that the preference shares would likely just be converted to common at maturity. So no bankruptcy fears.

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #298 on: July 18, 2018, 03:23:27 PM »
What is to be expected from the Parq operations?

Initially management gave guidance to GMP that Parq could do the following financially after a 12 month ramp period - should be the end of the ramp late this Fall...

Management has provided their financial expectations for Parq, which are subject to an
estimated 12-month ramp up period. Parq is on track to open in the fall of 2017.

 $75-$100 million EBITDA
 60-70% from casino activities
 10-15% from hotel activities
 15-30% from other services (food/beverage, parking etc.)


At the end of the first quarter they stated 2018 would look like this...

Parq guidance

Management has given guidance for 2018 and expects to generate EBITDA of
$50 to $75 million and in excess when operations are fully ramped up. As a
result of expected increases in customer traffic and slot utilization rates, 50%
to 60% of EBITDA is expected to be generated through casino operations
while the remainder is from hotel operations and beverage services.


So the contribution from the casino seems to be about 10% below in the overall results of the facility. It will be interesting to see if this is further adjusted in the Aug/Sep after experiencing the height of the tourist season in Vancouver (June - Aug). Potential value of Parq to Dundee using a simplistic valuation model of expected 2018 results is as follows ( On a fully converted basis, the Corporation holds a 45.9% interest in Parq Vancouver, while Paragon Gaming Inc. owns a 21.9% fully converted interest, and PBC owns a 32.2% fully converted interest)....

                EBITDA high     EBITDA low

               $75mm            $50mm

                 10X                 10X

EV              $750mm          $500mm

Debt           $550mm          $550mm

Equity         $200mm          ($50mm)

46% DC      $92mm             $0

At the upper end of the range value comes in at $90 million to Dundee using $75mm in EBITDA while Parq is owned by the debt holders at the lower end. Hopefully, upon full ramp in 2019, Parq can achieve the initial expected results resulting in a floor valuation to Dundee of $90mm & upside to a $200mm valuation with $100mm in EBITDA & possibly a much better financing arrangement.

As well, perhaps higher value & substantial financial breathing room could be extracted by selling the hotel operations in what is a strong Vancouver market - an example per room valuation multiple for the hotels would be $425,000 per room average over both the Douglas & Marriot's 517 guest rooms gives a valuation of $220mm just to the hotels & their expected approximate 15% - 25%  contribution to Parq EBITDA.

https://www.statista.com/statistics/496256/vancouver-downtown-value-per-hotel-room/

http://dailyhive.com/vancouver/interim-hotel-rooms-development-policy-vancouver-shortage

Vancouver’s tourism sector growth has been experiencing year-over-year records with overnight visitation, but this is not reflected in the city’s hotel accommodations capacity. A new report by the City of Vancouver states the municipality saw a net loss of 1,105 hotel rooms between 2008 and 2018, with the gains in the years leading to the 2010 Winter Olympics now lost.



SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #299 on: July 18, 2018, 06:20:04 PM »
Wouldn’t they just pay with common priced at $2 in that scenario? Lots of new shares issued but cash is saved and no default.

I wasn't sure of the answer so I asked my CFA tutor, who seemed to think that the preference shares would likely just be converted to common at maturity. So no bankruptcy fears.

With the stock at $1.50, that means the DC.PR.E would be worth $18.75 in that scenario and with that class trading ~C$24, it shows very little concern on the part of those preferred holders. In addition, if they did issue ~41m shares to pay for those preferred, the stock would likely be under significant pressure which would take the stock even lower meaning $18.75 is generous.
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