"management has more than adequately shown themselves to have undertaken the tasks necessary to right the ship"
when ingram says, of the extra cost to cover guarantees, "It's just a balance sheet transaction," isn't that misleading. doesn't the extra price paid for the assets have to be depreciated, amortized or written off?
regards
AgriBioTech Posts $2.3 Mln 3rd-Qtr Loss; Expenses Soar (Repeat)
Las Vegas, May 14 (Bloomberg) -- AgriBioTech Inc. said it lost $2.3 million in its fiscal third quarter as the turf and forage seed company struggled to digest more than 34 companies acquired since it was founded in 1993.
The loss of 5 cents a share in the quarter ended March 31 compared to earnings of $4.9 million, or 13 cents a share, in the same quarter a year earlier. While revenue increased 40 percent to $106.4 million, operating expenses soared 83 percent to $27.1 million.
Last month AgriBioTech warned it may not be able to fund this year's $13 million cost of servicing $136 million of debt. Richard Budd, who replaced Johnny Thomas as chief executive in February, said the company is on track to slash annual expenses by $14 million. ''Expenses are clearly the problem,'' said Budd, speaking in a conference call Thursday after share trading ended.
Although the company's stock gained 13/16 yesterday to 6 7/8, it's still down 47 percent so far this year. It traded at 29 1/2 last June.
Chief financial officer Randy Ingram said $2 million of the quarter's loss was from ''special charges'' which included expenses from plant closings, consulting and legal fees, severance costs and travel costs. He said the company expects restructuring costs this quarter and next will total $15 million or more. It made a series of 11 acquisitions in the year from April 1, 1998 to the end of the latest quarter.
AgriBiotech has had just four profitable quarters since it was founded. Cumulative losses total $24.3 million. Budd repeated the company expects a loss for fiscal 1999, which ends June 30.
Buyer Not Found
Ex-CEO Thomas quit one month after abandoning an effort to sell the company. In October he predicted a large chemical company would pay as much as $70 a share for AgriBiotech. No bidders came forward even after months of efforts by its investment bankers, Deutsche Bank Securities and Merrill Lynch & Co.
The Las Vegas-based company added a $6.7 million current liability to its balance sheet in the third fiscal quarter to cover guarantees to the previous owners of companies it purchased for Agribiotech stock that the value of their shares would remain above certain levels. Ingram said that included $4.6 million of guarantee payments in cash, and $2.1 million to be paid in stock.
Ingram said if AgriBiotech's stock remains at its current depressed level, an additional $2.2 million in cash and $4.5 million in stock will also have to be paid out to previous owners of acquired businesses to make good on more guarantees.
He said the estimated $13.4 million in guarantee payments don't increase the company's losses. ''It's just a balance sheet transaction,'' he said.
CEO Budd repeated his intent to buy back $23.3 million of convertible debt from bondholders next month to avoid having to issue new stock, a move that would dilute the value of existing shares. The terms of the bonds require a 20 percent redemption premium, or $4.7 million. The bondholders include a unit of Lehman Bros.
The bonds were issued less than six months ago by Thomas to raise cash to pay off short-term bank loans. If not redeemed, they will reset to convert into twice as many shares as when they were issued --when the stock was trading at double its current price.
©1999 Bloomberg L.P. |
