Quote:
Originally Posted by corporatejay
But what type of underlying assets do you have in your business? How much are those worth? You don't own your inventory unless your payables are current as your suppliers will have PMSIs. SO effectively you have receivables and goodwill.
You don't have billions of dollars of assets. Assuming an efficient market, the equity value is what is left after the debt is paid off. In that case, Penn Wet is still worth their market cap + whatever their debt obligations are. That could still be in the billions.
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Without getting into too much detail, we own land. If it was worth $30 our LOC is $5. Our inventory (paid) is about $10 and our receivables $6.
We run lean. Like really really lean. We learned back in the 80's how volatile oil was, and got out of it. Over the years we have had to reinvent ourselves due to a number of market forces like import pricing, family buyouts, government interference, margin pressures, environmental issues, you name it. When it happens we adapt; 4 or 5 years ago we lost some key accounts and our sales dropped 50% in a year. The bank slapped a bunch of covenants on our LOC, so we went scorched earth and adapted. Owners didn't get paid while we reorganized and built up cash. People lost jobs. It sucked. But we made it through and are in better financial shape for it.
I seriously feel like I'm taking crazy pills when I see what's going on downtown. There are well run companies no doubt. But there seems to be some real issues with some key decision makers, and it's scary when that includes a company as big as Pennwest.