Hi Brad, you seem to be a very intelligent investor and ask many well thought out questions. Unfortunately I have very few of the answers. LUXY was not one of my better investments, as I bought based more on a story rather than the usual research and reading of SEC documents that I usually do. In a nut shell, I bought this stock about a year ago(?) after the Boston Group essentially went under and were no longer making a market in the stock. If I remember correctly the stock plunged from about $8 to $1.10 and I bought in at $1.25. The reason I bought at that time is that I was convinceed by someone who knew the company that the only reason the stock was so low was because the Boston group was dumping it in a desperate effort to stop from going bankrupt themselves. I was also told that Oppenhiemer was very close to a financing deal with LUXY for LUXY to get 20 million dollars for about 1/3 of the company. At the time this looked like a steal of a deal. But as usual, when you dont do your homework, anything that looks too good usually is. The financing deal never came through and the stock languished. In order to stay afloat LUXY essentially sold of the concession rights to thier supplier in exchange for a loan. So, they lost a major source of income. I believe they still have about a year before they get back the concession rights (I could be wrong about that).
I am not familiar with the lease aggreements other than they do not own any off the properties except 1 (again, I am not 100% sure of this).
However, I have been told by some in the theater industry that this price for such new and advanced theaters is much cheaper than it would cost to replace, or build new theaters. I was led to believe that LUXY could be a decent aquisition target for a big chain, since they operate in very underserved areas, where there is basically no competition. Of course, that could mean the theaters are empty, I dont know.
As far as the delisting goes, the stock tanked to 3/8 of a dollar and then bounced right back in 2 days on heavy volume. I would surmise from all this volume that most of the tax selling for losses just took place, and I was pleasantly surprised to see the stock back at 13/16 on Friday.......as far as my selling it, I dont plan too. The theaters look to be very state of the art and seem to be able to operate without a problem. I believe the new financing deal was a steal for the new buyer and I am also aware that they have bought and turned around another small theater chain about 4 years ago ( this was in a previous press release). I think these folks know what they are doing.
So I plan to hold it for the future, especially since it is really a minor part of my portfolio.........I think that the new buyers, and the 15 million dollars will allow them to continue their building plans and open several new theaters. I believe the plan is to cash out 1-2 years by selling to a major chain. The new 51% owners paid some serious cash for Cinemastar, and I will wait a bit to see what they plan to do.......
I would greatly appreciate any further info you could post here. Thanks alot and best of luck to you.......;^) |
