Avon Products

[Fuel Fool]

Thinking about taking a flyer on Avon Products. They have a resurrection plan in place. Can anyone talk me out of it please.

[Louetta]

Thinking about taking a flyer on Avon Products. They have a resurrection plan in place. Can anyone talk me out of it please.

In-operative

[billyjoe]

Thinking about taking a flyer on Avon Products. They have a resurrection plan in place. Can anyone talk me out of it please.

Fuel, AVP has negative and declining earns, negative P/E, negative growth, and there are over 20 other companies better than them in personal cosmetics.
it's valued at .58/share. They are at a 15 year low and show no sign of reversing the trend. They better have a great new plan because there's not much positive to look forward to.

-----------------billy

[Louetta]

http://www.nasdaq.com/article/avon-avp-sells-stake-to-cerberus-to-enhance-performance-cm556432

OK, Cerberus must think they can do something else they would not invest the money but it looks like a coin toss for other investors. They have lots of competition and even with the restructuring they have to sell product. It's not clear they have anything new to sell tho no doubt they will advertise, beef up the sales force, etc. Cerberus may be getting a 5% dividend and their preferred has a convertibility feature. Other stock holders won't get these. It's risky.

[mimo_100]

We have a young mother who leaves her Avon brochure monthly in our paper slot. We always end up buying something - I like their products. If you have ever used "Skin So Soft" in a warm bath, you will love the product. It seems to me that a concerted marketing effort would do a lot to increase revenues.

[Louetta]

We have a young mother who leaves her Avon brochure monthly in our paper slot. We always end up buying something - I like their products. If you have ever used "Skin So Soft" in a warm bath, you will love the product. It seems to me that a concerted marketing effort would do a lot to increase revenues.

But you live in the US so this will not help people who own the publicly traded stock.

[riverbabe]

If you have ever used "Skin So Soft" in a warm bath, you will love the product.

Yes yes yes. But it's been out there for such a very long time and maybe forgotten by most. ULTA is taking every body by storm it seems.

[mimo_100]

But you live in the US so this will not help people who own the publicly traded stock.

I am not sure what this means - tell me please!

[Louetta]

I am not sure what this means - tell me please!

'Cording to reports on the deal "Per the deal, Cerberus Capital will buy an 80.1% stake in Avon North America for an equity investment worth $170 million. Consequently, Avon North America will be separated from Avon Products into a privately-held business spanning the U.S., Canada, and Puerto Rico. The latter will also include long-term liabilities from Avon Products of roughly $230 million, to be partly compensated by a $100 million cash contribution from Avon".

So I take that to mean stockholders will be left with what remains of the company outside the US, Canada and Puerto Rico so they will have Europe at least which is a decent market. They will shed $230 million of long-term debt but must pay the new private company $100 million to get it done. The new company will be paying license fees to the old one and put $435 million into the old one using a convertible preferred which might earn interest up to 5%. This is a competitive market. The people at Cerberus obviously think this is worth doing but they will have the new private company plus their convertible preferred.