SeriousMoney
Yes, sorry about that. Here it is.
By: mainlander
11 Jul 2006, 02:37 PM EDT
Msg. 138254 of 138277
(This msg. is a reply to 138251 by mainlander.)
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Jimmymack 2:
IF,, the CD can be taken out by a new financing then things are good. IF,, the cash flows from the muni contracts are great perhaps they can afford the cash repayment schedules.
The problem is,, many shareholders MAY not believe that one of the two (or both) of the above scenarios will occur. We have history in that regard,, don't we?
But, to me,,, this is not, nor it should be "all about" the the re-writing of the CD terms. It will work or it will not,, just another "risk factor".
No,, what it is about, at least to me,, is how the hell we got to this point in the first place. It appears,, that due to eroding rev. based subs. could not provide the cash flows to service the existing CD and Jay simply bought more time and the new terms favour Cornell for the most part, imo. Not exactly negotiating from a position of strength.
So let's review the asset in question.
Davel was acq'd in Nov. 04 for app. $14mm. , 5mm warrants (.30) and another app. $450k to buy-out the public OS.
Jay and Kurt jumped on this acq, and rewarded themselves a 3% bonus (3% of $14mm each) as did brokers, consultants etc. Considerable extra costs,, imo.
Since this was just a "bridge loan" all of a sudden "Cornell" jumped in to pay them(Arlie) out. More expenses and costs: a $1.295mm financing fee, 6mm Warrants (.50) for NOW a $15.5mm CD obligation just to pay-out a $13mm balance.
So what have we got:
Davel's rev's in 05 were app. $55mm.
In 06 they dropped to app. $40mm
The 06 'net income" excluding amortization was app. $860,502k (source: 10KSB recently filed).
So what will Davel provide us with this fiscal year?
The problem was and is,,,, the "cash flows" from these acq's are going to "pay the lights", so to speak (salaries etc.) and not to organic growth. As their rev's deteriorate, further expenses are "sliced" (salaries, layoffs, etc., this is occuring as we speak I am told) putting them in a position of of being less able to retain accounts and thrive.
So,, to me,,, this is not a picture of sound financial manangement, quite the opposite, imo.
While many may not agree with my assessment of Jay,, one has to look at what we acquired, the costs, and todays result and it is not accretive as we have been lectured on.
Having said that I am very hopeful that Sullivan can "fix" things and bring new money to the table and keep Jay away from it. I guess that would mean that we should hire a CEO,, since we do not have one.
Take care Jimmy:
Mainlander
