Xponential sells CPFH pref stock for 1.3 mil!!! Xponential is cashing out their CPFH preferred stock. Improving operating earnings and revenues at Pawn Mart are moving this company towards profitability. We also know that liquidity remains tight at Xponential and that Pawn Mart can generate high rates of return on additional capital through expanded pawn loans which generate high margins. Xponential also needs to free up cash eventually to make up deferred interest on the pref stock issues and refinance bonds by 2014.
Cashing out the CPFH investment is consistent with the above goals. The Q2 CPFH report showed that a 905k loan that was mandatorily convertible into CPFH stock had been bought back by CPFH generating cash for Xponential (see previous posts on this).
The Q3 results released by CPFH today show a continuation of this process. 3.05 mil shares of 6% CPFH pref stock were repurchased by CPFH from XPOI for $1.3 mil. The 1.3 mil will be paid in installments over 2 years. The stock was convertible into CPFH (now trading at 7 cents / share) at 50 cents per share. The pref stock had a par value of 50 cents / share, but had already been marked down due to the low share price of CPFH so it's probably about breakeven on an earnings basis.
Great move by Xponential to improve liquidity and focus resources on improving operations at PawnMart!
From the CPFH 10Q filing today:
NOTE 12 – SUBSEQUENT EVENTS
On October 21, 2011, the Company signed a Stock Purchase Agreement and Promissory Note with PawnMart, Inc., which allows the Company to purchase back its 3,050,000 shares of outstanding Preferred Stock from PawnMart, Inc. in exchange for a Promissory Note in the amount of $1,300,000, approximately $0.4262 per share. The note carries a 7% interest rate, and will be paid in 24 quarterly installments of $66,801. There were no additional events that have occurred subsequent to the Company’s quarter-end. Subsequent events have been evaluated through November 8, 2011, which is the date these financial statements were issued
