Friday, November 9, 2012

Cybergun Part 2

The problem with dumpster diving is that one is occasionally faced with having to work in the service of one’s capital. Break out the pencil, fill in the missing information, do some sums, and make a decision. Grubby stuff, far removed from the more patrician activity of investing in high quality issues.

Still, I asked for it by taking a position in Cybergun, so here goes.

The premise:

At the beginning of the calendar year, Cybergun was a fast-growing business, generating an average return of 13% on its net operating assets and 44% on its incremental investments. It buys the right to use brand identities from all major gun manufacturers and makes its money from converting those brand licenses into replica weapons that it sells on to the consumer market. A 3% spread between returns and investment, therefore, is a quite reasonable estimate of its economic worth; and, since licenses are fixed and sunk costs, it makes some sense that increased sales should generate higher incremental returns. 

So, valuing Cybergun at (13% ROIC / 10% Cost of Capital) x Net Operating Assets of 54 Million, giving it no credit for future growth, and subtracting net debt, sums to a lowball equity intrinsic value of €8 per share. And indeed, at the beginning of the year, that’s where Cybergun’s shares were trading.

Subsequent developments:

Since then, Cybergun’s share price has fallen by 85%, which would seem to suggest that either the initial valuation was wrong or that something has changed over the course of the year. 

I am confident that the initial analysis wasn’t wrong. There are, nevertheless, some things to think about:

Gross Margin compression: The gross margin that the analysts following Cybergun use to model their estimates and valuations is 40%. In fact, Cybergun’s gross margin has varied between 38.1% and 48.8% in the period 2003 to 2010. So, their idea is that Cybergun’s baseline gross margin is 40% with anything above that as a bonus. So, when gross margin fell to 34% in the year ending March 2012, it triggered a wave of downgrades and, presumably, sell orders. 

Liquidity: A 34% gross margin is unsustainable. At that level, Cybergun’s ability to cover its interest charge is called into question.

Dividend: Cybergun is accustomed to paying out a dividend at the half-year mark – that is, at the end of September. The dividend is usually in the order of 50 cents per share, which would have yielded, at the Sept 2012 stock price, 20%. For the above reasons, it opted not to pay a dividend this year. That decision accelerated the sell orders.

Year-on-Year fall in revenue: H1 2012 sales (in the period ending Sept 2012) fell by 12% over H1 2011 sales. Since Cybergun is a growth story – actual long-term growth has exceeded management’s long-term growth guidance of 20% CAGR – a fall in sales now, when it had powered through the 2008-2010 period unaffected, looks ominous.

My take:

Between March 2011 and March 2012, China’s CPI inflation rate was running at 6.5% which likely approximates the increase in input costs facing Cybergun. The company was likely to have passed on almost half of this inflation, absorbing 3.5% in reduced gross margin. By contrast, in the period September 2011 to September 2012, China CPI rose at 1.8%, so we should see TTM gross margin expand back to its normal 40% level.

At a ~40% gross margin and 79.5m revenue, we’re looking at 2.44 million in cash from operations before changes in working capital. The company tells us that it has worked down its inventory by 4.9 million in the TTM, so operating cash flow, after taxes, interest and reduction in working capital, should be in the region of 7.3 million. After 3 million in previously committed capex, TTM free cash flow should be €4.3 million. (The company tells us in its latest quarterly statement that there will be a pause in growth capex as it uses cash flow to pay down debt). So dividend and interest cover are not – if I’ve done my sums right – an issue: Cybergun should be in a better financial position today than it was a year ago, when its shares were trading at 11.

Between H1 2010 and H1 2011, revenue (in dollar terms) grew by 45%, far above the long term trend. It was inevitable that H1 2012 would suffer in absolute terms as distributors’ inventory was worked down to normal levels. There is nothing to suggest that the long term trendline of 20% growth has been broken.

Note: As should be plain from the discussion above, the TTM figures are of my own devising. I have pieced together the information provided by the company re: revenue, inventory levels, capex and net debt to piece together a complete cash flow schedule that it doesn't provide.

Revenue trends

Geoff Gannon sensibly advises that one should relive one’s experience of buying the stock rather than one’s experience of owning it. This has been my attempt to do just that. I feel no differently toward Cybergun than I did 5 weeks ago. It’s worth 8 to 12. Or so I say. Time will tell.

Disclosure: I have a position in Cybergun and may double or triple it at prices below 1.20


  1. Where are you able to get their financials in English?

    What do the covenants look like on the debt tranches?

    Do you have a link to the prospectus for the 8% bonds they issued in 2010?

    This is a complete black box for my anglo ears, and I dont believe in hope as an investment thesis.

  2. English translations of the financials are available only for the years before FY 2012.

    The English language translation of the latest trading statement is available here:

    The (French language) full quarterly report for the period ended Sept 30 will be available on December 15th

    The closest thing to an English version of the prospectus for the 2016 8% bonds can be accessed here:

    The bonds are listed here:

    There is no covenant on any of the debt tranches. None were listed in the annual French language regulatory filing, and this (paid-for) analyst report purports to confirm that:

    The (long-term) debt maturity schedules are as follows:
    6 million due in July 2013
    3 million due in January 2014
    9 million due in 2016

    The main revolver was issued in March by a Texas bank at Libor + 2.5% and expires in 2014

    I should note management's stated objective of reducing working capital by a further 8 million in the second half of this fiscal year.

    Thanks for the questions.

  3. hi,

    i remember Seth Klarman once said:

    Certainly, when a few securities start to get cheap even as the bull market continues, a value starved investor will step up and buy them. Soon enough, many of these prove to be no bargain at all, as the flaws that caused them to be rejected by the bulls become more glaringly apparent when the world gets worse.

    Year over year, Cybergun SA has seen their bottom line shrink from a gain of €4.0M to a loss of €22.5M despite an increase in revenues from €73.7M to €84.7M. An increase in the percentage of sales devoted to cost of goods sold from 61.36% to 66.22% was a key component in the falling bottom line in the face of rising revenues.

    Cybergun SA may have more financial risk than other companies in the Leisure Equipment and Products industry as it is one of the most highly leveraged with a Debt to Total Capital ratio of 79.83%. This ratio actually increased over the last year. Additionally, an examination of near-term assets and liabilities shows that there are not enough liquid assets to satisfy current obligations. Accounts Receivable are typical for the industry, with 56.73 days worth of sales outstanding. Last, Cybergun SA is among the most efficient in its industry at managing inventories, with only 190.58 days of its Cost of Goods Sold tied up in inventory.

    2009 2010 2011 2012
    CASH FROM OPERATIONS 8.0 2.9 -8.6 4.1
    Capital Expenditure -0.6 -1.2 -4.5 -16.1

    ROA 1.57%
    ROE -130.9%

    just wondering and thinking about whether this company has a 'moat' or even 'durable competitive advantages'. at least PSA has a brand name.

    or maybe you are in this as a liquidation or 'special situation' play?

    on whether Cybergun has capable and honet management with high integrity, let's benchmark their thoughts and actions. time will tell but i doubt there will be any positive results. i could be totally wrong. maybe i will learn something from this. i rather stick with quality.


  4. Thanks for the question/comment, Sunny.

    I guess my response is in four parts:

    1. Moat: A durable competitive advantage is, by definition, a good reason as to why a particular company can earn returns that exceed the cost of the capital employed in generating those returns.

    In my two posts on Cybergun, I'm suggesting that, in aggregating a number of brand licenses, Cybergun can add some value to by using common manufacturing and distribution systems. To the extent that it commands the lion's share of the replica gun market -- and it does -- it becomes quite hard for someone else to compete with it. That it earns an economic profit of 3% (13% returns on employed capital minus 10% cost of employed capital), and that it can sustain it, doesn't seem at all implausible to me. I would be more than a little interested to hear someone express a coherent view as to why it couldn't or wouldn't.

    2. Investing is a zero-sum game, and whether one wins or loses depends on the quality of the competition. It is hard to win when investing in the well-known, large capitalization companies, just as it is difficult to win, for example, the World Cup. At some point, you're going to have to play against Spain. Good luck.

    In the microcap space, however, you're playing against a pub side. There's cause for some confidence, as long as one has done one's thinking, and one's arithmetic, properly.

    Thinking about single-line businesses facing a stable product demand curve is not all that challenging. Nevertheless, it happens to be the one thing that computers (or a quick glance at the numbers) can't replicate: computers can't think and numbers are no substitute for thought. And therein lies the potential.

    For example, these two paragraphs -

    "Year over year, Cybergun SA has seen their bottom line shrink from a gain of €4.0M to a loss of €22.5M despite an increase in revenues from €73.7M to €84.7M. An increase in the percentage of sales devoted to cost of goods sold from 61.36% to 66.22% was a key component in the falling bottom line in the face of rising revenues.

    Cybergun SA may have more financial risk than other companies in the Leisure Equipment and Products industry as it is one of the most highly leveraged with a Debt to Total Capital ratio of 79.83%. This ratio actually increased over the last year. Additionally, an examination of near-term assets and liabilities shows that there are not enough liquid assets to satisfy current obligations. Accounts Receivable are typical for the industry, with 56.73 days worth of sales outstanding. Last, Cybergun SA is among the most efficient in its industry at managing inventories, with only 190.58 days of its Cost of Goods Sold tied up in inventory"

    - read very much like text that has been computer-generated: it appears to impart information but is actually almost wholly devoid of any meaningful content.

    3. Management. This is an owner-operated business. I haven't found any reason to suppose that Jerome Marsac would profit from losing his business. There are, to be sure, some competence issues -- the decision to diversify into video games was expensive and not clever, and not just in retrospect. My sense, however, is that management's enthusiasm for super-fast growth has now been tempered.

    4. "I'd rather stick with quality". Me too.

  5. One suggestion: As they have a bond. Why not calculate the implicit risk of bankruptcy, which is implied by the spread of the bond? At these prices of the stock, I would have expected the bond to trade much lower. Because they don't have a proper english annual report, I am not invested.
    Kind regards,

  6. Thanks for the comment, Martin.

    I'm a bit of a luddite & probabilistic cost of bankruptcy models have an element of scientism about them that makes me uncomfortable. It is my failing, entirely.

    I tend to think in binary terms, and this is how I see at the distress scenario:

    The value of the business that can be defended in BK court is 70 million
    The cost of bankruptcy is, say, 10% of enterprise value, or 7 million
    Adj Enterprise Value is therefore 63 million
    Net debt is 42 million
    The residual is 22 million, which, per share = (22/4.8) = 4.58

    If the bondholders play hard and take half the value of the equity as well as being made whole on the credit side, the per share value for current shareholders = 11/4.8 = 2.29

    2.29 was my cost basis.

    And yes, given the pessimism reflected in the stock price, one would expect the 8% bonds to be trading at 60c or so. And if they were trading at 60c, I think I'd come close to preferring those bonds to the stock.


    Readers interested in a good probabilistic approach to incorporating the cost of bankruptcy can find one here:

  7. Thanks for the reply and the links. I actually enjoy dumpster-diving, hence my questions.

    In the equity, it strikes me that your return at ~€1/sh will come more from whether the Company is able to manage the refi issues and less about your valuation of the business.

    [I’m going to assume now that the remaining €48 million of net debt as of Sep-2012 cited in the Company’s press release is short-term and due within the next]

    Short-term revolving credit facility / bank debt (Texas bank, maybe French banks?) due within the next 2 years: €30 million
    07-2013: €6 million
    01-2014: €3 million
    10-2016: €9 million (I presume these are the bonds that you linked the Company’s notice to)
    Total net debt: €48 million [I’m assuming excess cash is €0]

    Equity Value @ €1.20/sh with 4.7 million shares = €5.6 million

    Total enterprise value = €54 million


    Here’s what I would do instead.

    This situation is reminiscent of a discussion on Grupo TMM (a Mexican railroad that filed Chapter 11 in 2004 over refinancing issues… it was controlled by a wealthy Mexican family and owned ~55% of the Company’s equity) given by JET Capital’s Matt Mark to Joel Greenblatt’s Special Sits class at Columbia.

    As of today, the 8% Oct-2016 bonds have traded down to 79 cents. The Company is however still paying interest on these notes.

    What happens if they miss a bond interest payment (January 18, April 18, July 18 or October 18)? The notes will trade down to <50 cents.

    To be conservative given my complete and utter ignorance of the structure / seniority of the Company’s debts, I’m going to assume that of the €48 million of net debt, the €8 million bond is junior to the other €40 million.

    Let’s assume “normalized” annualized revenue of €70 million (a nice round number and slight haircut on CY2010 gun replica revenues) and EBIT margins of 10%, so €7 million of normalized EBIT. Assuming a ~30% tax rate (I’m just spit-balling, so work with me…), I get €5 million of net profit.

    I kind of like the business in the same way you described in your original write-up… niche-y, good ROIC, probably can get good, steady price increases from the gun nut collector-types over time. So let’s say this deserves a 10x P/E, or 10% after-tax yield.

    So that leaves us at €50 million of enterprise value on a net debt-free basis.

    If €40 million of debt is in front of the bonds, that means the bonds are the fulcrum security and thus get par recovery in the form of 100% of the equity in a restructuring.

    Given the importance of the business to the French family, there’s no way they let this happen. In lieu of losing control of the business, they probably sell some assets or re-equitize the Company, in which case the bonds trade back up to par + accrued interest (and at <50 cents, you have a 15% cash-on-cash return while they slug it out in court).

    The big watch-out for me, which makes me nervous, is that unlike the hard assets of a Mexican railroad, the “intangibles value” of the Company’s Replica Firearms license contracts may evaporate in a bankruptcy.

    In other words, what stops the Family from simply forming a new company right after the bankruptcy and sign the Gun Replica contracts with this newly formed company? They lose the €30 million of inventory, but that’s not enough to give any recovery for the bonds.

    Any idea how to get your arms around that?


    Btw, I do like your thesis on the equity if you can figure out the refi / liquidity bridge, but the problem I have with the equity is one of portfolio management – I can’t make this more than 5% of my portfolio since there’s real risk of 100% loss, whereas I could make the bonds 20-25% of my portfolio since I feel there is low risk of impairment.

    Btw, I agree with every one of your responses to Sunny. Too many eyes on the companies >$1bn market cap… “go small.” That’s where Buffett, Munger, Greenblatt, Klarman, Burry will all tell you to go if you have the smarts…

    Btw part II... the academic discussions of implied default probabilities are totally useless IMO.

  8. Tbone,

    First, the licenses belong to the company so, in the event that the bondholders take control of the equity, the licenses would belong to them and the family wouldn’t be free to carry on under a different masthead. These licenses are intangibles in name only – unlike goodwill and the like, they are hard, tradable assets like, say, patents.

    Second, the licenses can be resold in pieces – Korea exclusive, Hong Kong exclusive etc. Reselling these would not materially impact the company’s core business, which is overwhelmingly concentrated in the US and European markets, and would raise perhaps €5 to 7 million.

    Third, there are some other non-core assets that could (and, anyway, should) be sold off: the company spent €16 million t acquire 50% of its Chinese supplier last FY. Reselling it, even at a 50% haircut, would raise €8 million and benefit the business; the Tech Group subsidiary, paintball for kids, is operating at negative ebitda and could be sold for 0.5x sales of €4 million. Etc. There are a number of divestiture options that will leave the core not only still standing, but, in my judgment, better off.

    Fourth, this is what the tranches looked like in July, in order of seniority:


    Revolver 1: EUR €2.215m
    Revolver 2: GBP 0.125m
    24-month Credit Line: USD $17.5m (2 years, May 2012-2014)


    US Term Loan: $10.132m (due 2015)
    French Term Loan: €5.889m (due 2014)
    British Term Loan: GBP 3.238m (due 2015)

    7.5% PREPS Bonds (“PREPS 1” due July 2013): €6.0m
    7.8% PREPS Bonds (“PREPS 2” due Feb 2014): €3.0m
    8% Bonds due 2016: €9.0m
    So, €38m of the debt was senior to the bonds.

    Net debt was 47.4m in March and 51.8m in June. It is now (as of Sep 30) 48.3m.

    Again, from the regulatory filing, “Il n’existe pas de clause de covenants sur les emprunts obligataires” and” Il n’existe aucune restriction éventuelle portant sur l’utilisation des capitaux par le Groupe”: No covenants and no restrictions on how the debt is used.

    Due within one year is the PREPS I Bond, in July 2013 (€6.0) and the PREPS 2 Bond, in Feb 2014 (€3.0m).

    These principal payments and interest payments over the next year can be covered by the €8m in cash on hand and the €3.6m in unused line of credit.

    Also, the company’s steady state level of working capital is~80 days, implying a working capital requirement of ~18m at an 80m level of sales. That’s 10 million less than 2012, and 5 of that has already been freed up, implying that the balance of that amount – 5 million – will come in H2. Management says 8 million; I like 5 million better.

    In any case, by the time, in 2014, that the Euro-denominated term loan is due for payment and the USD-denominated credit line is due for renewal, the company will have a better balance sheet than it did when it rolled over (and increased) its credit line in May of this year. And in the meantime, it will have had the opportunity to spin off non-core assets.

    This seems to me the most realistic scenario, even accounting for all the mind-numbingly bad decisions that owner-managers can make in this kind of situation. In this particular case, I think the owners have too many options available to them to render a takeover by bondholders a reasonably foreseeable eventuality.

    Thanks for the detailed and thought-provoking response and questions.

  9. Red -- the bonds have traded down dramatically over the last week. Closed at 49¢ today and at one point touched down to 47¢. This kind of trading activity usually points to a default, but you sure wouldn't know it by looking at the equity. Any idea what's going on?

  10. Two other questions:

    1) Have you seen quotes on the term loans?
    2) Have you seen quotes on the PREPS bonds?

  11. Sam, the 8% bonds now look quite interesting, don't they?

    I haven't seen quotes for the other debt and the only news that I'm aware of is that the 15% owner of the equity sold off some shares -- a development that was reported to the financial authority on Nov 27.

    The company reports full quarterly financials on Dec 8th, so it may be worth waiting for that before making decisions.

  12. The 8% Bonds have traded down to 39¢ -- something is clearly up that the equity holders don't know about. I don't know what the interest payment dates are for the other bonds -- Company must have missed them on some of the other tranches and the news is being whispered through the debt markets. I would get out of the equity now before they announce something publicly so you can reposition yourself for buying the Bonds.

    The Bonds may get even more interesting if/when they publicly announce a default. These small, foreign bond issues tend to be woefully undercovered and consequently mis-priced especially in default situations.

    I don't know whether the Bonds are worth par [I think so, but it's ultimately up to the judge and the parties involved], but given the importance to the controlling Family, I have to imagine they are worth at least 40¢ on the dollar.

    Is there a French regulatory website that I can pull up the financial data you have cited (akin to the US's EDGAR)? Understood that it'll be entirely in French. Or will I need to rely strictly on the Cybergun Investor website?


  13. Thanks for the heads up, Sam.

    The regulatory site is

    7.29 million in cash as of March. Interest payments that don't, in sum, exceed 1 million per year. No maturities in 2012. A 17m line of credit that can be used for any purpose. An annual meeting in September that talked about share buybacks rather than share issuance. These data points don't add up to a missed interest payment.

    I hear you on the relative sophistication of the debt markets but if I start to take my cues from the market price of any security rather than from what I perceive, with some reason, to be the underlying state of affairs, I'll be well on my way to losing my bearings as an investor.

  14. Fair enough, I think that represents a sound strategy too. You know what you're doing, so I think that makes sense too.

    Btw, to your point, the whole situation is even more strange based on the "sizeable" cash & inventory balance. I have seen this before though -- Nortel declared bankruptcy with >$1bn of cash (~2 years of operating costs) in order to allow them to "fend off" creditors while they did an orderly sale process for subsidiaries. Tougher to get cash pre-petition, obviously.

    This situation is a bit different considering we don't appear to be in the midst of a massive financial panic (vis a vis January 2009 anyway), but it may part of the Family's attempt to salvage equity value [which would be good for you at ~EUR 2 regardless].

    Anyway, just speculating here.

    All that said, the Bonds sure look pretty interesting at these levels. I'm not prepared to litigate in a French court for my holders rights though, so don't know how much of my portfolio I would make this sort of thing and what kind of return I'd need to buy something that may be a bagel [I'm a complete rube when it comes to French bankruptcy law].

    Thanks again for the interesting conversation.

  15. Thanks for talking this over with me

  16. The company reported details yesterday:

    Cash on hand = 6.0 million, YOY inventory reduction of 4.6 million, etc. Everything is as it ought to be.

  17. Yes, but ebit and net result was negative. Ebitda down 48%. Newtown massacre won't be good for short term sales in the US. Although it's just toys, I would'nt give them away for now.

  18. I am currently long in Cybergun and have waited about 2 years to buy them at about 6E, I roughly doubled this at 3E and tomorrow afternoon I expect to have twice my current the shares.

    In my personal opinion the share price prior to the recent figures was already reflected, yet their shares dropped even further.

    I expect the recent shooting accident of having only a short time negative effect on the share price. Such incidents have happened before and I do not think it will have significant legal restrictions on the sale of replica-guns.

    Cybergun appears to have learned from their prior mistake of venturing into the production of a 3D shooter for the X-box. Currently, at least according to the recent news, they have focused on certain 'air gun arenas' (with possible franchise), which I do not consider a bad move at all.

    Their share price dropped roughly 84% the last 12 months, and 21 % last 30 days. Especially after recent news about their figures a negative pressure was present.

    Certain sites are picking them up as possible bargain, such as

    Certain things are of a negative effect though. The possibility of a selling new shares for debt restructuring. A few key players with relatively large amounts of shares, that might know things common stock owners don't. The small odds of another company buying cybergun, I can imagine gun replica's are not the most ethical product to be sold for Mattel for instance. The limited liquidity of their assests.

    Il y a longtemps que je t'aime.. ;)

    Keep up the good work, I enjoy your site :)

  19. et jamais vous ne l'oublierai :)

    Jermoe Marsac says they're negotiating with their lenders and will report the outcome when the negotiations are done.

    From my perspective, I see three possible was forward:
    1. extending the maturities of the debt due in 2013 and 2014
    2. sale of non-core assets
    3. issuing equity

    The last is by far the least desirable, but if they double the number of shares outstanding at the current price, they'll raise 7.1E which, along with cash on hand and cash flow generated in the intervening period, is enough to cover the maturities in 2013 & 2014, and the shares should re-price accordingly, to about 4 euros.

    Thanks for the comment & Happy New Year

  20. Roughly six months later and a lot has happened.
    This morning the year results of 2012-2013 (until 31 March) have been published, which caused a further 8% decline of the share price at a minor volume of about 35k pieces.

    Since december the share price didn't have a significant change in price, hovering between 1.38 and 0.87 euro. The general tendency however, seems negative. In an attempt to increase capital, a succesful emission took place at .97c which was underwritten for about 104%. The amount of shares doubled, currently being around 9.2m.

    The results were, as expected, quite gloomy for the entire full year.

    Short sum up (mistakes might be included) of 9-7 report:
    Ended with a loss of 12.5m
    EBIT -5.8m
    EBITDA -2.1m
    Sharp decline in sales compared to the prior year (EUR 69.5 vs 84.7)

    Balance: 1.3m equity (after the capital raise of 5.3m), debt 45.1m, cash 7.2m and an unused credit line of 4m.

    Further changes in ownership: J. Marsac family reduced to less than 15%, Amoury de Botmiliau increased to 24%.

    The first trimester of 2013 (from 1 april until 30th of june) has shown a further decrease in sales of 25% in USD when compared to same period in 2012.

    Sales shifted, with about 50% sold in the US and 40% in Europe, now being vice versa.

    What I find odd about these numbers is that the economy is blamed while, to my opinion, the national economy in the US show greater signs of recovery versus Europe. This does not correlate with the sales figures, which show the greatest drop in the US.

    We shall see how things go, I have fully participated in the emission and am still long.



  21. Upcoming agenda:
    2013 23 july: Numbers First trimester 2013, 22 October: Numbers semester, 17 december: Results first semester

    1. Zwelgjuh - Thanks for the detail & the link. One or two more bad trimestres and I'm going to exit.

  22. French anual report is out:

  23. You are welcome red. I hope you were wiser than I was and put it back into the bin.
    Quickly summing multiple capital increases took place, resulting in a total amount of shares close to 80 million. Furthermore call options have been offered at the most recent capital increase, ending at december 2016 and december 2017. The current share price is at an all time low at about 12 eurocent, resulting in a market cap of about 13 million euros, also an all time low. It has not achieved profitability yet and revenue is decreasing. The management has been replaced (was Jerome Marsac).
    A great contrast to the dividend earning cash cow it has been during the 2000-2010 period.
    My current reason to stay long is still an improved debt position and a previous very lucrative market. This goes against my feeling of a being a ship that is sinking with a captain combined with a main shareholder I am doubtful to trust. It seems I will sink with this ship. Thus far my result has been -50%. I expect the annual 2015 earnings release to be a major event, resulting in either return to profits with great increase of share price or just another step in the negative spiral of capital increases and delayed bankruptcy.

  24. Well I'm glad that we made some gains in HA at least. I do still find myself still confused by the Marsac's decision making.

  25. One doesn t learn how to walk without falling ;) Which decision confuses you the most? Perhaps short time personal benefits were chosen at the cost of longer term gains for the company. And the adagium of "Too little, too late" seems to apply more often than not with capital increases.

  26. Well the path of least resistance was to lay off the unvecessary capital expenditures on a non-core business in the face of a looming liquidity crisis. Family business, built from the ground up, modestly cyclical licensing revenue that's not easy to kill. But he hit the accelerator instead of the brake pedal. Very strange behavior, frankly.


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