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BRILLIAN : Will Syntax-Brillian Survive?

luyckxj
29 févr. 200811:42

Will Syntax-Brillian Survive?
posted on: February 29, 2008 | about stocks: BRLC

It is probably an understatement to say that Syntax-Brillian (BRLC), makers of the Olevia televisions, is now in deep financial trouble. The stock has fallen about 78% from $3.12 at the beginning of the year to a low of 70 cents. The most recent sell off was prompted by the company or rather the company’s creditors forcing the company to disclose they were in default over 19 covenants of their loan in an 8-K. I have been highly critical of the $250 million financing obtained by Syntax-Brillian back in November in a previous article. The main reason was the terms of the loan had interest rates between 11% to 13% at the time and required the company to issue 5 million warrants, exercisable at 1 penny per share, for Syntax-Brillian common stock.

Now, the terms of the loan have become even worse under an amended agreement that took place on February 14, 2007. The new agreement sets the minimum interest rate at 15.5% for prime rate based loans and 13.5% for Libor rate based loans. The company’s line of credit has been reduced from $250 million to $120 million. Since the company borrowed $137 million, they would have to pay down $17 million. In addition, the company is also required to pay immediately the amount of around $8 million in interest and fees to their lenders. The revised agreement also imposed many mandates onto Syntax-Brillian. Many of them had a deadline of February 19, 2008, which the company failed to meet.

In the Schedule A of the 8-K, it lists the 19 defaults of the company. The most concerning one is that the company failure to prepay the loan down to $120 million and other payments as required by the amendment. The company also failed to notify their lenders they would be in default, failed to provide projections, cash budgets, and reports to their lenders, and failed in meeting many other obligations of the loan. There are also some minor issues like insuring James Li, president and CEO, for a $100 million minimum policy that the company wasn’t able to perform.

The lenders agreed to give the company until February 29, 2008 before taking further action in the forbearance agreement made on February 21, 2008. Although each day the company is in default, they are required to pay a default rate which translates to even higher interest. However, the actions by the lenders in the amended agreement do not signal they have a lot of hope in the company. Rather, it appears they are doing what they can in order to protect their money. They have cut off the company’s credit, required the company to have their approval before utilizing cash, forced the company to submit budgets to them every week, and assigned an “Operation Advisor” to oversee the operations for the company. The “Operation Advisor” though would definitely be looking out for the interest of the creditors rather then the shareholders. On top of it all, the creditors are also taking title to inventory purchased outside of the US and required Syntax-Brillian to dissolve Vivitar Japan, pledge 65% of Vivitar France, Vivitar Asia, and either dissolve or pledge 65% of Vivitar UK as collateral.

It also appears that some Wall Street analyst has given up on Syntax-Brillian. CIBC World Markets and Brean Murray had both discontinued their coverage on the company. Not too long ago they both had some of the most bullish analysts on Syntax-Brillian. They once both had price targets of $15 at one time, which of course never came close. Although when they had those price targets, they helped co-manage Syntax-Brillian’s secondary offering for around $140 million back in May of 2007. I have also been critical of that issue back in an article in May.

Now, it remains to be seen if the company can further renegotiate with their lenders, obtain other financing, find some other way to repay the loan, or be forced into Chapter 11. If the company manages to stay afloat with the current crisis, things are not looking too bright in the future. With the unreasonably high interest rates at a minimum of 13.3% to 15.5% on the current loan, it would greatly hurt the profitability of the company if they can even stay profitable. If the company were able to obtain another loan to pay down the current one, it would be hard to get a much lower interest rate given the financial distress the company is in. In addition, recent reports suggest that growth for flat-screen television appears to have peaked out in the United States. Companies may have to further discount their televisions in order to attract buyers.

The company is also still unable to report their earnings for the quarter ended December 31, 2007 after issuing a delay on February 11, 2008. As a result, the company received a Notice of Delisting from Nasdaq on February 22 that they were not in compliance with Rule 4310 which the company disclosed on February 28. Syntax-Brillian is currently delinquent under Rule 4350 too, which requires a majority of independent directors. After failing to meet the requirement since October 22, 2007, the company still has not publicly announced the appointment of a new independent director.

Source:
http://seekingalpha.com/article/66607-will-syntax-brillian-survive

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1 réponse

  • saint126
    29 février 200814:09

    It is probably an understatement to say that Syntax-Brillian (BRLC), makers of the Olevia televisions, is now in deep financial trouble. The stock has fallen about 78% from $3.12 at the beginning of the year to a low of 70 cents. The most recent sell off was prompted by the company or rather the company’s creditors forcing the company to disclose they were in default over 19 covenants of their loan in an 8-K. I have been highly critical of the $250 million financing obtained by Syntax-Brillian back in November in a previous article. The main reason was the terms of the loan had interest rates between 11% to 13% at the time and required the company to issue 5 million warrants, exercisable at 1 penny per share, for Syntax-Brillian common stock. Now, the terms of the loan have become even worse under an amended agreement that took place on February 14, 2007. The new agreement sets the minimum interest rate at 15.5% for prime rate based loans and 13.5% for Libor rate based loans. The company’s line of credit has been reduced from $250 million to $120 million. Since the company borrowed $137 million, they would have to pay down $17 million. In addition, the company is also required to pay immediately the amount of around $8 million in interest and fees to their lenders. The revised agreement also imposed many mandates onto Syntax-Brillian. Many of them had a deadline of February 19, 2008, which the company failed to meet. In the Schedule A of the 8-K, it lists the 19 defaults of the company. The most concerning one is that the company failure to prepay the loan down to $120 million and other payments as required by the amendment. The company also failed to notify their lenders they would be in default, failed to provide projections, cash budgets, and reports to their lenders, and failed in meeting many other obligations of the loan. There are also some minor issues like insuring James Li, president and CEO, for a $100 million minimum policy that the company wasn’t able to perform. The lenders agreed to give the company until February 29, 2008 before taking further action in the forbearance agreement made on February 21, 2008. Although each day the company is in default, they are required to pay a default rate which translates to even higher interest. However, the actions by the lenders in the amended agreement do not signal they have a lot of hope in the company. Rather, it appears they are doing what they can in order to protect their money. They have cut off the company’s credit, required the company to have their approval before utilizing cash, forced the company to submit budgets to them every week, and assigned an “Operation Advisor” to oversee the operations for the company. The “Operation Advisor” though would definitely be looking out for the interest of the creditors rather then the shareholders. On top of it all, the creditors are also taking title to inventory purchased outside of the US and required Syntax-Brillian to dissolve Vivitar Japan, pledge 65% of Vivitar France, Vivitar Asia, and either dissolve or pledge 65% of Vivitar UK as collateral. It also appears that some Wall Street analyst has given up on Syntax-Brillian. CIBC World Markets and Brean Murray had both discontinued their coverage on the company. Not too long ago they both had some of the most bullish analysts on Syntax-Brillian. They once both had price targets of $15 at one time, which of course never came close. Although when they had those price targets, they helped co-manage Syntax-Brillian’s secondary offering for around $140 million back in May of 2007. I have also been critical of that issue back in an article in May. Now, it remains to be seen if the company can further renegotiate with their lenders, obtain other financing, find some other way to repay the loan, or be forced into Chapter 11. If the company manages to stay afloat with the current crisis, things are not looking too bright in the future. With the unreasonably high interest rates at a minimum of 13.3% to 15.5% on the current loan, it would greatly hurt the profitability of the company if they can even stay profitable. If the company were able to obtain another loan to pay down the current one, it would be hard to get a much lower interest rate given the financial distress the company is in. In addition, recent reports suggest that growth for flat-screen television appears to have peaked out in the United States. Companies may have to further discount their televisions in order to attract buyers. The company is also still unable to report their earnings for the quarter ended December 31, 2007 after issuing a delay on February 11, 2008. As a result, the company received a Notice of Delisting from Nasdaq on February 22 that they were not in compliance with Rule 4310 which the company disclosed on February 28. Syntax-Brillian is currently delinquent under Rule 4350 too, which requires a majority of independent directors. After failing to meet the requirement since October 22, 2007, the company still has not publicly announced the appointment of a new independent director. Source: http://seekingalpha.com/article/66607-will-syntax-brillian-survive
    Il est probablement un euphémisme de dire que Syntax-Brillian (BRLC), les responsables de l'Olevia téléviseurs, est aujourd'hui en difficulté financière profonde. Le stock a diminué d'environ 78% par rapport à 3,12 $ au début de l'année à un creux de 70 cents. La plus récente vendre a été motivé par la société ou plutôt de l'entreprise oblige les créanciers à l'entreprise de divulguer qu'ils étaient en défaut plus de 19 pactes de leur prêt dans un 8-K. J'ai été très critique à l'égard de 250 millions de dollars le financement obtenu par Syntax-Brillian retour en novembre dans un article précédent. La principale raison a été la durée de l'emprunt avait des taux d'intérêt entre 11% à 13% au moment requis et de la société à émettre 5 millions de bons de souscription, exerçables à 1 penny par action, pour Syntax-Brillian common stock.

    Maintenant, les conditions du prêt sont devenues encore plus grave en vertu d'un accord modifié qui a eu lieu le 14 février 2007. Le nouvel accord fixe les taux d'intérêt minimal à 15,5% pour les taux de base des prêts fondés et 13,5% pour le taux Libor à base de prêts. La société propose une ligne de crédit a été ramené de 250 millions à 120 millions de dollars. Depuis la compagnie a emprunté 137 millions de dollars, ils auraient à rembourser 17 millions de dollars. En outre, la société est également tenue de payer immédiatement le montant de l'ordre de 8 millions de dollars en frais d'intérêt et à leurs bailleurs de fonds. L'accord révisé a également imposé de nombreux mandats sur Syntax-Brillian. Beaucoup d'entre eux ont une date limite du 19 février 2008, dont la société n'a pas réussi à satisfaire.

    Dans l'annexe A de la 8-K, il dresse la liste des 19 défauts de la société. Le plus préoccupant est que la défaillance de l'entreprise par anticipation le prêt de descendre à 120 millions de dollars et d'autres paiements comme prévu par l'amendement. La société a également omis d'aviser leurs prêteurs qu'ils seraient en défaut, a omis de fournir des projections, le budget de trésorerie, et des rapports à leurs prêteurs, et en cas de défaillance dans la satisfaction de nombreux autres obligations de l'emprunt. Il ya aussi quelques problèmes mineurs tels que l'assurance de James Li, président-directeur général, pour un minimum de $ 100 millions de la politique que la société n'était pas en mesure d'effectuer.

    Les bailleurs de fonds sont convenus de donner à la compagnie jusqu'au 29 février 2008 avant de prendre d'autres mesures dans l'abstention accord conclu le 21 février 2008. Bien que chaque jour, l'entreprise est en défaut, ils sont tenus de payer un taux de défaut qui se traduit par un intérêt encore plus élevé. Toutefois, les mesures prises par les prêteurs dans le cadre de l'accord modifié ne signalent pas qu'ils ont beaucoup d'espoir dans la société. Au contraire, il semble qu'ils font ce qu'ils peuvent pour protéger leur argent. Ils ont coupé de la société de crédit, nécessaires à l'entreprise d'avoir leur approbation avant d'utiliser de trésorerie, a forcé l'entreprise à présenter des budgets qui leur sont chaque semaine, et affectée d'un "Operation conseiller» pour superviser les opérations de l'entreprise. Le «Opération conseiller» serait certainement bien voir à l'intérêt des créanciers plutôt que les actionnaires. En plus de tout cela, les créanciers sont également en titre à l'inventaire achetés en dehors des États-Unis et Syntax-Brillian requis pour dissoudre Vivitar Japon, la promesse de 65% de Vivitar France, Vivitar Asie, et de dissoudre ou le nantissement de 65% des britanniques comme Vivitar Collatéraux.

    Il apparaît également que certains des analystes de Wall Street a abandonné sur Syntax-Brillian. Marchés mondiaux CIBC et de Brean Murray, ont tous deux cessé leurs reportages sur l'entreprise. Il n'ya pas si longtemps, ils avaient tous deux parmi les plus optimistes des analystes sur Syntax-Brillian. Ils avaient tous deux une fois le prix cible de 15 $ à un moment donné, ce qui bien sûr n'est jamais venu près. Bien que quand ils avaient les objectifs de prix, ils ont aidé à co-gérer Syntax-Brillian secondaire de l'offre à environ 140 millions $ en mai 2007. J'ai aussi été critique à l'égard de cette question dans un article du mois de mai.

    Maintenant, il reste à voir si l'entreprise peut encore renégocier avec ses prêteurs, à obtenir d'autre financement, de trouver une autre façon de rembourser le prêt, ou être contraints dans le chapitre 11. Si l'entreprise parvient à rester à flot avec la crise actuelle, les choses ne s'annoncent pas trop claire à l'avenir. Avec les taux d'intérêt anormalement élevé à un minimum de 13,3% à 15,5% sur le prêt actuel, il serait très mal la rentabilité de l'entreprise, même si elles peuvent rester rentables. Si l'entreprise a été en mesure d'obtenir un nouveau prêt pour rembourser celui en cours, il serait difficile d'obtenir un taux d'intérêt beaucoup plus faible compte tenu de la détresse financière de l'entreprise est po En outre, des rapports récents suggèrent que la croissance de la télévision à écran plat apparaît Avoir culminé dans les États-Unis. Les entreprises peuvent avoir pour d'autres réductions de leurs postes de télévision, afin d'attirer les acheteurs.

    La société est également toujours dans l'impossibilité de faire état de leurs revenus pour le trimestre terminé le 31 décembre 2007 après la délivrance d'un retard le 11 février 2008. En conséquence, la société a reçu un avis de radiation du Nasdaq le 22 février qu'il n'était pas en conformité avec la règle 4310 dont la société divulgués le 28 février. Syntax-Brillian est actuellement délinquant en vertu de la règle 4350 aussi, ce qui requiert une majorité d'administrateurs indépendants. Après avoir omis de répondre à l'exigence depuis le 22 octobre 2007, la compagnie n'a toujours pas annoncé publiquement la nomination d'un nouvel administrateur indépendant.

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