Author Topic: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?  (Read 176622 times)

Potato

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #360 on: August 17, 2018, 05:38:23 AM »
Two recent blog posts on Dundee from others:

https://divestor.com/?p=8229

http://prefblog.com/?p=37057

I have B & D prefs, and tend to oscillate between excitement at how cheap they are (and look how much there is on the balance sheet behind them!) and a deep fear that the bums will get so enthralled at watching their dumpster fire that it ends in tears for all.


Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #361 on: August 17, 2018, 06:41:20 AM »
I don't think they will wait until next summer. Last time, the E's were heading towards their June redemption date, they pulled the trigger in November. The timing will probably be similar this time.

I also think the stock would have to be well above $2 for the E shareholders to be ok with the outcome of getting all stock as trying to sell ~40m shares, isn't easy.

I suppose if the option presented to E holders is to get converted to common and lose almost half their value or get extended with some kind of sweetener then they most likely will take the extension. But I'm not sure what Dundee could do to sweeten the offer much.

My question is are we sure that Dundee wouldn't rather convert? Presumably an extension would eliminate the conversion option at $2. I am not sure that Dundee won't take it now instead of losing that option forever. I am no longer an owner of the common, just the B and D, so obviously I would prefer they convert, so maybe that is influencing my judgement!
« Last Edit: August 17, 2018, 07:15:35 AM by Rod »

petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #362 on: August 17, 2018, 09:11:44 AM »
If I was them I would not want to lose the convert option. That would be a deal breaker in a negotiation for me. And I wouldn't accept a lowering of the conversion price (much). Notably they said on the call that in the future they ideally have no liabilities at all so it's possible that future access to the credit/pref markets is not something they care about. Plus, credit markets have short memories these days and I have no doubt Dundee, if it turns its position around, would be given access.

So I tend to think renegotiation and conversion are roughly 50:50 probabilities, at least from my outside vantage point.

Obviously conversion is great for the other prefs. Whether conversion is good for the common depends entirely on your estimate of BVPS. In my base case, NAV is low enough that conversion is accretive to common BVPS. I'm being pretty punitive with some of the more opaque values (generally allowing for half of BV and in some cases nothing, including for UHIC which could easily be a zero) so my NAV is $81m. Conversion adds $83m, doubling the NAV but "only" adding two-thirds to the share count.

My base case has NAVPS at $1.38 and converted NAVPS at $1.66. Obviously conversion takes away some of the upside but it's still anything up to 5x on my bull NAVPS (with the major needle-movers being DPM rerating, Parq turning out OK, and UHIC producing oil). So, I kinda like the idea of converting. It leaves me with great upside and lower risk. But conversion would create a massive overhang in the shares. I can see a huge opportunity developing in the common over the next few months, and if that happens I'll buy more (depending on newsflow).

I see the common is down 11% today. Has anyone seen any news or are we just seeing (more) capitulation?
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Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #363 on: August 17, 2018, 09:48:29 AM »
I canít see the Eís voting to extend if the $2 conversion remains. Whatís the benefit to them? And I have a hard time seeing Dundee give up the conversion option.

petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #364 on: August 17, 2018, 10:15:33 AM »
I canít see the Eís voting to extend if the $2 conversion remains. Whatís the benefit to them? And I have a hard time seeing Dundee give up the conversion option.

Agreed.
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SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #365 on: August 17, 2018, 01:08:44 PM »
I canít see the Eís voting to extend if the $2 conversion remains. Whatís the benefit to them? And I have a hard time seeing Dundee give up the conversion option.

Well itís a few more years of dividend payments and perhaps a chance at par again. A potential loss later versus a certain loss now, I suppose.
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Cardboard

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #366 on: August 19, 2018, 05:59:33 PM »
It is interesting that the "E"'s only finally woke up to the danger ahead over the last 4 or 5 trading sessions. What were they thinking about?

Looking at the shit show at Aimia, where dividends have been suspended for a while (still cummulate), it just shows the potential with the Dundee "B" and "D" preferreds with any improvement at the company. These are in a way, with no conversion into stock possible, much safer than the "E"'s on some stampede liquidation.

Dividends have still been declared for September and with the number of assets held, no debt, why not continue? And even if they are cut (they accumulate unless I am mistaken), we have Aimia to look as an example of how bad it can get. For the Aimia "B"'s, I see for example $7.32 as the low but, it did not stay there long.

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sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #367 on: August 21, 2018, 11:14:53 AM »
Canaccord has moved 2.2 million shares over last 2 days at $1.12...

33 Canaccord  2,156,290 2,415,044 1.12  2,201,548 2,466,186 1.12  -45,258 51,142

Capitulation by a long term holder, while the new investor believes they might be getting a bargain. At this point hinges on the outcome of the advanced discussions on Parq as sellers are betting it has negative future worth to DC.

Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #368 on: August 21, 2018, 02:01:37 PM »
Canaccord has moved 2.2 million shares over last 2 days at $1.12...

33 Canaccord  2,156,290 2,415,044 1.12  2,201,548 2,466,186 1.12  -45,258 51,142

Capitulation by a long term holder, while the new investor believes they might be getting a bargain. At this point hinges on the outcome of the advanced discussions on Parq as sellers are betting it has negative future worth to DC.

Maybe it was Ned Goodman! Iím only half jokingóhe received a deferred share grant of 2 million shares earlier this month.

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #369 on: August 22, 2018, 11:20:55 AM »
The Parq complex would be very attractive to various Asian hotel & gaming groups looking to expand their gaming empire from Macau or Hong Kong to North America. Companies such as Galaxy Entertainment, Sands China or Melco Resorts have multi billion market caps and access to financing at much lower costs than the high yield debt that is hobbling Parq at the current time.

With regard to Canadaís hotel sector, itís experiencing its own boom. Case in point: in early March, Vancouverís Rosewood Hotel Georgia set a new record in Canada when Hong-Kong-based Able Shine Enterprises and Magnificent Hotel Investments Ltd. purchased the property from Delta Land Development Ltd. for $145 million. It surpassed the Four Seasons Hotel Toronto deal by nabbing the countryís highest recorded price per key at $929,000 per room. Another significant off-shore deal took place late last fall as APA Group of Japan finalized plans to buy Vancouver-based Coast Hotels for $210 million through a share purchase agreement with Okabe Co. Ltd. of Tokyo, bringing the brandís 36 properties into its stable.

In January, Leadon Investment Inc., a private investor group with ties to Hong Kong, inked a deal to buy British Columbia Investment Management Corporation (bcIMC)ís hospitality arm for more than $1 billion, becoming the new owner of Silver Birch Hotels & Resorts.

ďLast year was our peak of interest, because there were a few transactions where foreign groups wanted to buy bulk and have a platform for further expansion in North America, so theyíre buying one-off portfolios,Ē explains McLuskie. They also donít want to waste time on smaller assets. ďThe challenge is they donít want to come here for a $10-million deal. Itís not worth it for such a small transaction, so theyíre looking for larger deals where it makes sense to save money and they are looking for key markets and larger site sizes.Ē


https://www.hoteliermagazine.com/canadas-hotel-market-good-value-foreign-investors/