Pancho, WDRY's December secondary produced about 54 million for the company (39 million for insider sellers). They then bought Apt Laundries & Sharp Distributing for $16 (presumably cash) and then bought Mackie Laundry for $214 (cash & debt). The press release after Mackie said: This transaction represents the seventh significant acquisition Coinmach has consummated during the past two years. Coinmach has spent approximately $590 million in this industry since November 1995, while acquiring historical revenues of approximately $345 million. A couple of days ago, WDRY filed a notice with the SEC for a special shareholders meeting to vote to double the authorized common shares from 15m to 30m & increase pref shares from 1M to 10M. The question is why the hurry? are they are setting up the possibility of another secondary? (seem a little unlikely so soon); do they want to make more buy outs but to use equity instead of cash (possible, but so far WDRY appears to be only buying private companies, turning their hard assets into cash, why would any other potential seller take equity instead cash?); to begin offering generous stock options/bonus plans for employees (again possible, but this is a typical item in a regular SHM, why call a special meeting just for that); or as some here suggested, WDRY wants to have stock split (also possible, that would lower the per-share debt, which has got to be pretty substantial at this point, also a split may be seen as a way to keep the stock price elevated as splits are commonly perceived to be bullish action). You make your best guess as what is going on here.
What I do know from the technicals is that WDRY has begun a near term decline. Whether it will go further than support lines at 25 or 20, I do not know. My guess is that the secondary underwriters would not allow the stock to fall below the offer price ($19.75) so soon. However, the story must begin to unravel at some point.
Ron |
