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Microcap & Penny Stocks : Qurate Retail -- Ignore unavailable to you. Want to Upgrade?

To: sixty2nds who wrote (81)	10/14/2025 1:01:24 PM
From: Sean Collett	Read Replies (1) \| Respond to of 83

Hi 60, As I contemplate the latest ratings downgrade for QVC and look at things like First Brands I can't help but continue to analyze this. It presents a wonderful learning opportunity in fundamentals, credit, and investor psychology. As of yesterday, the spread on the single-B and CCC are starting to rise fast as risk is starting to become pricey: I really think any of these LME folks that follow QVC have no idea what an LME really is for and are just using it as a buzzword because they see them done elsewhere and assume it makes sense for QVC. The main objective for an LME is to buy time. A massive OOC debt restructuring is not the objective and when you have multiple creditor classes and maturity pools it makes performing an LME statistically difficult to achieve even with $1,305M in liquid cash. BTW I can't help but note again of that $1,305M at QVC, Inc, it's not really free money as 75% of it came from borrowing from the bank and they have to pay (currently) $59.09M annually to use it. The risk I see is you can take out all the senior bonds but it doesn't solve the problem which is JPM and the rest of the syndicate have $2,900M loaned out to a company not only not growing but aggressively contracting. They are the nearest maturity and the highest single risk. An A&E at this stage does nothing to protect the banks either given EBITDA declines and no real turn plan in place from management. I suspect this is why the banks have not gone with an A&E either because if they were open to it why not do it in Q4 2024 when Ben Oren started talking to them? Instead just a series of progressively worse moves. Based on the spread I shared below is where I see things starting to align on a future credit agreement rate: The above isn't how the banks will come up with the pricing but I reckon it will be pretty close to what I have here +/- a few bps. If I breakdown my LME scenario again I see the following picture start to form (all a guesstimate of course): So the problem we have is back to what I've said all along: if you don't take out 100% of the senior notes the leverage is still too high and the real hidden risk I never see discussed is if the banks price the revolver higher it basically kills any real cash savings from the LME. At the possible 11.24% rate today the company is actually paying ~$56.15M MORE in interest annually even with burning a ton of cash to make the LME work: If I go with a lower rate of say 9.055% (my original estimate) the interest savings is only $7.07M annually....cash still burned via LME and cash savings is still too low to really benefit. Banks are also still the biggest risk in the room now and had recovery value bled out. This has court written all over it. The outside credit events unfolding (e.g., First Brands, TriColor) are going to make everyone analyze the risk they are taking. EBITDA trend for QVC Group and/or QVC, Inc is itself a concern and with everything else going on this one likely cannot be solved OOC: The issue on EBITDA too is back to what I stated above and elsewhere; there is no clear plan on how the company pivots their revenue stream. Per David Rawlinson in their second quarter 2025 earnings "we estimate that social and streaming revenue is approaching low double digits as a percentage of QxH revenue. That obviously still leaves 90% of revenue in QxH driven by core linear and digital". 90% of their revenue stream is tied to linear/digital and until there's a turn my model have been holding up on predicting QVC, Inc existing customers for multiple quarters: The existing customers are the ones most correlated to revenue too so I am less interested in any narrative anyone paints about Tiktok because this is a huge effort to address. Likely what the banks are going to look at too when they asses their risk(s). The timeline below is almost a play-by-play of a getting ready to file in court. I keep sharing because it just screams to me court and not liability management. March 7th, 2025: Fitch downgrades QVC to B- from B May 21st, 2025: Moody's downgraded QVC, INc from B2 toCaa1. May 23rd, 2025: QVC Group suspended paying QVCGP dividend. May 27th, 2025: Greg Maffei chairman agreement extended. The Employment Agreement provides for an initial term expiring December 31, 2025, which will be automatically extended through December 31, 2026 unless a notice of nonrenewal is provided by either party at least 30 days prior to December 31, 2025, or Mr. Maffei’s employment with the Company ends before such date (such period of employment, the “Term”). May 28th, 2025: QVC hired Evercore, Inc and Kirkland & Ellis and senior holders hired PJT Partners and David Polk & Wardell LITNA holders hired Centerview and Akin Gump Strauss Hauer & Feld May 30th, 2025: Fitch downgraded QVC again going from B- to CCC+. June 20th, 2025: QVC hired Roger Meltzer of DLA Piper and Carol Flaton to the board paying each $50K a month. August 7th, 2025: Earnings released and revenue further disappointed. Revolver had $75M drawn in addition. It was also reported after earnings period company borrowed another $975M on the revolver bringing total borrowings to $2,900M. August 13th, 2025: QVC credit syndicate got 75% together and hired Simpson Thacher & Bartlett. August 15th, 2025: Company adjusted executive compensation which mirrors a KERP/KEIP plan. August 26th, 2025: S&P downgraded QVC from CCC+ to CCC. September 26th, 2025: QVC amended and restated certificate of incorporation for QVC, Inc and amended and restated By-Laws of QVC, Inc. Paul Keglevic (part of Rite Aid and Envision bankruptcy) and Jill Frizzley (president of Wildrose Partners and oversaw governance prior to bankruptcy filings). October 6th, 2025: Moody's downgraded QVC, Inc from Caa1 to Caa3. Waiting game now. I think if they are going to file it would make sense after the holidays to prevent a possible disruption to holiday cash flows. I estimated prior they may have filed earlier in 2025, but that was proven wrong so I am adjusting they won't file until after the holidays now. The revolver will go current in their 10-K which won't be until February or March 2026 so they have time to get the holiday cash and then go into court since Q1 is traditionally weak for them too. Happy investing, Sean