Q: Hi Team,
What's going on with GSY today dropping 5%? Is the tender offering viewed as negative somehow? Looks to me all they are doing is paying off other debt with the new debt. I would assume the company knows what they are doing here, not sure why the negativity around this.
thanks,
Shane.
What's going on with GSY today dropping 5%? Is the tender offering viewed as negative somehow? Looks to me all they are doing is paying off other debt with the new debt. I would assume the company knows what they are doing here, not sure why the negativity around this.
thanks,
Shane.
5i Research Answer:
Because of tthe tender offer, GSY provided preliminary guidance, and indicated several metrics. Most were fine, with charge offs remain low, but loan growth was expected to be between $235M and $265M. This compares with $286M reported in the second quarter so some investors took this as a slowing of growth. This is of course possible, but there is some seasonality to the business as well. We would not see the tender offer itself as a material event, but again, a negative view point could be implied, possibly: if GSY can redeem debt then maybe growth has slowed.