Peter Hodson Concordia International Corp CXR-T COMMENT Aug 03, 2016

He is pessimistic on this. They recently hired another set of advisors to advise them on capital structure. That usually doesn’t end well for equity holders. Just had so much debt. The big UK acquisition they made really went south on them in a hurry. Expects debt holders are either going to want a massive equity dilution or for some kind of bankruptcy and restructuring. The equity is probably close to worthless.

Doesn’t think this is investable. Net debt to EBITDA is about 11X, which is very high. They have absolutely no visibility in terms of pricing in the UK, because the whole pricing regime is changing. She can’t see how they are going to pay the debt which comes due in 2021.

(A Top Pick June 21/16. Down 95%.) He sold this before the end of last year.

He loves turnaround stories with lots of debt. When you get them right, they really move. This one is not a turnaround yet. It has a lot of things that you look for, what it doesn’t have are signs of a turnaround. Wait until you see two quarters of deleveraging and improving margins. The stock will move from there. It still has bankruptcy risks.

She wouldn’t be buying this now, even though the stock price has come down dramatically from what it was a few years ago. This has only been public for about 4-5 years, and they’ve been buying assets. There is a lot of pricing pressure on the drugs they bought and paid a lot for. Has a lot of debt on their balance sheet. Debt to Enterprise EBITDA is over 11X. There is a big question as to how they are going to repay the debt when it comes due. Based on what they have now, it doesn’t seem sufficient.

It has lost the overwhelming majority of its value. It is burdened with leverage. It is important to step back and take a cold, clinical view of it. The market does not care what you paid for it. The prospects going forward don’t look very favourable for it. The subordinate debt went into default this week. The stock is more of a lottery ticket.

It is a very Canadian story. They are a drug manufacturer that were hit in a wave that took down others. He does not follow it closely, but a number of these stories have the ability to reconstitute themselves. They can find a way to make money at it or find someone to take them over.

You likely can’t salvage anything from here. If you are interested in this stock then wait for it to have a couple of positive quarters and let the chart be your guide.

They are going through a restructuring, which is a codeword for bankruptcy. It is in the purely speculative category. There is nothing here for common shareholders.

Likes turnarounds, but it’s not ready. Want to see two things: 1) the stock hitting a 52-week high, and 2) the numbers moving in the right direction. Don’t do anything until then. Odds are this is going to zero.