Well the ship is righted so to speak, at least from the point that Avid is once more a going concern and everyone can again refocus on business execution and working on filling up our excess capacity. So from a pure business and financial stability point of view, Avid is back on track.
The share price unfortunately is not doing so well as there is still considerable doubt out there by buyers of whether Avid can get their proverbial sh_t together...at the very least, this is certainly a black eye...a bump in the road....a pothole....well you know what I mean.
The interest they are paying on this convertible is not terrible but will result in an additional 10 million(plus or minus) in interest expense every year which is not ideal, but if they start making progress on filling capacity and don't have any more major setbacks, this additional expense can easily be absorbed.....as we all know, profitability is all about filling capacity as our margins overwhelmingly increase with our increase in volume due to the high fixed costs. At full capacity this becomes a cash cow with margins in the 30% to 40% range....we can all do the math here...the loan becomes a footnote and could be paid off easily in just one year of this positive cash flow.
Don't get me wrong.....I am not excited here about the short term prospects, and still hugely disappointed in how management messed up on their original convertible and still want some answers(which may or may not be forthcoming). But in the end I am holding this stock and will not sell here.
If a buyout offer came in the $10 to $12 range, I would seriously consider voting in favor as IMO, we will not again see the $20's for a very long time(IMO).
