Q: Hi Team, The monitor for David's Tea has issued their report and plan of compromise to be voted on by the companies creditors on June 11th. The report can be found here https://www.pwc.com/ca/en/services/insolvency-assignments/davidstea-inc-/monitor-s-report.html. It is a pretty quick read.
It seems like a clever, well thought out plan. What do you consider the likelihood that this plan gets approved by 67% of the creditors (based on value owed) in both the US and Canada?
In cases like this, does PWC work with the creditors in advance to "secure the votes" or are they just looking to just get the best deal possible for DTEA and hope it gets approved.
In my view, the trade suppliers and employees likely vote in favor. Canadian landlords may also be okay at 22 cents on the dollar. My concern is with the US landlords who only look to be getting 3 cents on the dollar (which is still better than what they would get in a bankruptcy). My question is do landlords typically have a threshold at which they would not accept a settlement below a certain % of their claim.
If it does not get approved does the monitor look to negotiate with the creditors or is bankruptcy automatic?
If this ends up in bankruptcy the estimated cost of the bankruptcy is $27 million, DTEA does have enough cash to pay out this sum. In that case, would the common shares still hold their value and would common shareholders be entitled to equity in any newco?
I recognize this is beyond the usual scope of the questions so please deduct question credits at your discretion
It seems like a clever, well thought out plan. What do you consider the likelihood that this plan gets approved by 67% of the creditors (based on value owed) in both the US and Canada?
In cases like this, does PWC work with the creditors in advance to "secure the votes" or are they just looking to just get the best deal possible for DTEA and hope it gets approved.
In my view, the trade suppliers and employees likely vote in favor. Canadian landlords may also be okay at 22 cents on the dollar. My concern is with the US landlords who only look to be getting 3 cents on the dollar (which is still better than what they would get in a bankruptcy). My question is do landlords typically have a threshold at which they would not accept a settlement below a certain % of their claim.
If it does not get approved does the monitor look to negotiate with the creditors or is bankruptcy automatic?
If this ends up in bankruptcy the estimated cost of the bankruptcy is $27 million, DTEA does have enough cash to pay out this sum. In that case, would the common shares still hold their value and would common shareholders be entitled to equity in any newco?
I recognize this is beyond the usual scope of the questions so please deduct question credits at your discretion
Q: Good morning, thoughts on the Q4 from DTEA and thier transition from bricks and mortar to an online retailer.
Once the CCAA is settled what do you see as a reasonable multiple on this type of business, considering thier online revenue growth rate was close to 100% year over year. Do retailers who garner the majority of thier revenue online command better multiples than traditional bricks and mortar businesses?
Once the CCAA is settled what do you see as a reasonable multiple on this type of business, considering thier online revenue growth rate was close to 100% year over year. Do retailers who garner the majority of thier revenue online command better multiples than traditional bricks and mortar businesses?
Q: Hi team 5i, I may be your only member following this stock but I find it a unique and intriguing story. On July 8th they filed for CCAA/Chapter 11 and the stock traded around .80. Since then the stock has traded mostly above $1 and closed after a late run today on high volume at 1.75. I don't see any news today. I believe they will be emerging from CCAA mid-December, perhaps someone knows something?? Do you have any comments on this restructuring or can you turn up any news from your sources that I may not be able to access. From what I see, the loose leaf tea concept is a hot trend right now and these guys are the market leader.