Regis Corporation (RGS), the owner of Supercuts, has announced a significant refinancing deal. The company secured a new credit facility to refinance its existing debt, which resulted in a substantial stock price surge. The stock rose over 300% in a single session, from $6 to $22, making it the top gainer in the market, with a pre-market increase of +119.3%. The refinancing deal was facilitated by Bank of America (BofA), which took a large hit, allowing RGS to preserve equity and net operating losses (NOLs). Despite the positive market reaction, some analysts caution that the company's cash flow remains weak, with $5.5 million or 23% of its EBITDA of $23.7 million coming from deferred franchise fee revenue. Additionally, cash interest and net lease liabilities continue to drain cash, indicating that cash flow is still anemic. The refinancing was highlighted by Steve Yonezu, Head of Research.
$RGS refi is obv a huge +, but I would be cautious here. $5.5m or 23% of EBITDA of $23.7m is from deferred franchise fee rev, so cash EBITDA is ~$18m. Cash interest is around $11m & cash drain from net lease liabilities is another $5m or so of cash drain..so, CF is still anemic
The Stock du Jour -- $RGS https://t.co/7kRzof89mE | Another great issue...
Our Head of Research @SteveYonezu did it AGAIN. $RGS (owner of Supercuts) had a game-changing refinancing this morning. 2.5 hours before market open, with the stock trading at $6, Yonezu alerted it. #1 gainer in the market today rising over +300% in a single session to $22 π https://t.co/VEFaDw9OJi
$RGS (+119.3% pre) Regis Corporation Announces New Credit Facility to Refinance Existing Debt - BW https://t.co/SxOYH6Uho3
Holy smokes, home run refi from the $RGS management team. Got BofA to take a large hit, minimal dilution, preserved the equity and NOLs. Stock now primed to generate sustainable FCF https://t.co/sDB4NETt9y