Global Axcess Corp. has seemingly operated under a self-imposed news blackout since the company announced last fall that it was up for sale.
The Jacksonville-based company, which operates automated teller machine and DVD kiosk networks, had a very proactive approach to investor relations in the past. However, the company did not even issue cursory news releases to announce its financial results for the fourth quarter of 2012 and this year's first quarter.
The company has filed its quarterly reports with the Securities and Exchange Commission and its first-quarter filing last week shows a company that is struggling.
Global Axcess reported a net loss of $12.1 million, or 53 cents a share, in the quarter.
The loss was largely the result of a write-down of the value of certain assets, but the filing also said the company is experiencing liquidity problems.
As of March 31, the company had negative working capital — current assets minus current liabilities — of $17.1 million.
"The net losses and net working capital deficit create an uncertainty about the company's ability to continue as a going concern," the filing said.
Global Axcess hasn't said anything more about its efforts to sell the company, but one note in last week's filing said that it is getting out of the DVD business.
The company was formed more than a decade ago with its ATM networks, but added the DVD rental business in 2009 as a way to diversify its operations.
Global Axcess said it notified its major client in the DVD unit in March that it was selling the business, and the client responded by terminating its contract, effective next month.
The DVD business accounted for $926,290 of Global Axcess' total revenue of $7 million in the first quarter.
In addition to exploring a possible sale of the whole company, Global Axcess said in the quarterly report that it is seeking other ways to raise capital.
"If these efforts are unsuccessful, the company may be forced to seek relief through a filing under the U.S. Bankruptcy Code, which could result in the total loss of shareholders' investments in the company," it said.
Global Axcess' stock has been trading below 10 cents a share for the past month.
I was unable to reach a live person when I called the company's Southside offices last week. The company did not respond to voice mail messages.
Atlantic Coast Financial schedules shareholder vote
Atlantic Coast Financial Corp. last week set a date for its special shareholders meeting as the war of words continued over its proposed buyout agreement.
The Jacksonville-based banking company will hold the meeting on June 11 for shareholders to vote on the $5-a-share offer from Bond Street Holdings Inc.
If approved, the company's Atlantic Coast Bank subsidiary will merge into Bond Street's Fort Lauderdale-based subsidiary, Florida Community Bank.
However, shareholders holding 26 percent of the stock, led by former Atlantic Coast Financial Chairman Jay Sidhu, already have pledged to vote against the deal.
Sidhu sent another letter to the board of directors last week arguing that the company is worth more than $5 a share, which he says represents only 33 percent of the company's tangible book value.
"And as you have undoubtedly noticed, the market appears to agree with our belief," Sidhu's letter said.
Since the first week of May, Atlantic Coast Financial's stock has traded above the $5 offer price and reached as high as $6.88. That indicates investors are speculating on a higher offer, although there has been no hint of an alternate bidder for the company.
Atlantic Coast Financial Chairman John Linfante and Chief Executive G. Thomas Frankland responded with a letter Thursday saying that "Sidhu does not take into account the financial, regulatory and competitive realities that face the company."
They argue that the company's future is at risk if it does not complete the merger.
They also disputed Sidhu's estimate of the company's book value. They said that after factoring in the value of "high-cost debt" on the balance sheet, Atlantic Coast Financial's adjusted book value is actually less than $4 a share, so the offer from Bond Street represents a premium.
While all this was going on, Atlantic Coast Financial also reported a first-quarter net loss of $2 million, or 81 cents a share.
The bank reduced its volume of bad loans in the quarter but the company still said it faces the need to raise capital and get rid of debt. So in the news release announcing the quarterly results, Frankland took the opportunity to lobby shareholders to approve the merger.
"Our pending merger with Bond Street Holdings, Inc. focuses specifically on those issues — immediately satisfying our capital mandate and resolving our high-cost debt, and as a result, we believe this transaction will successfully achieve the company's goal of providing maximum value to our stockholders," he said.
Fortegra reports disappointing earnings
Fortegra Financial Corp. fell to a 52-week low Wednesday after the Jacksonville-based insurance services company reported disappointing first-quarter earnings.
Adjusted earnings of 17 cents a share were unchanged from last year's first quarter and 5 cents lower than the average forecast of analysts surveyed by Thomson Financial.
Still, CEO Richard Kahlbaugh saw bright spots in the quarter.
"I am pleased to report that 2013 has gotten off to a good start and we believe the company is on the right trajectory. For the first time in a long time we are seeing positive developments in all three of our business segments," Kahlbaugh said in Fortegra's conference call with analysts.
"As with any company, there is still work to do to improve certain aspects of our business but overall I believe we are moving in the right direction," he said.
Kahlbaugh said the company is dealing with a "challenging economic and regulatory" business climate.
"We are finding ways to grow the business while managing expenses and that makes us optimistic about our success for the remainder of the year," he said.
FBR Capital Markets analyst Randy Binner also is optimistic about Fortegra's prospects, maintaining an "outperform" rating on the stock.
"Our sense is that the story here should be OK and that the first quarter is a bit of a growing pains quarter," Binner said in a research note.
"We continue to believe the market does not fully appreciate the basic story here, which is that Fortegra is an insurance services company that is focused on generating fees rather than on taking underwriting risk. We believe this enables safer growth, relative to life and P/C (property-casualty) insurers, given low interest rates and pricing/reserve uncertainties around the turn in the P/C market," he said.
William Blair & Co. analyst Adam Klauber is more cautious with a "market perform" rating.
"Management alluded to several positive business trends in each of the underlying business segments and a positive outlook for the rest of 2013, but regulatory uncertainty, particularly from the Consumer Financial Protection Bureau, continues to mute demand for many of Fortegra's products," Klauber said in his research note.
"While management's guidance range suggests they remain bullish on the company's potential for 2013, we believe first-quarter results indicate that it will be a significant challenge for the company to achieve those targets this year," he said.
Fortegra's stock fell as much as 63 cents to $7.17 Wednesday after the earnings report.
Flowers remains mum on Hostess
Flowers Foods Inc. still isn't saying much about its planned acquisition of 20 bread bakeries and five bread brands from Hostess Brands Inc.
Before anyone could ask, Flowers CEO George Deese cut off questions about Hostess in the company's quarterly conference call last week.
"I know you have many questions about the proposed Hostess acquisition, but let me tell you up front that since this matter is under regulatory review, we will not be able to answer your questions regarding this transaction," he said.
Deese did say it expects to complete the acquisition in the second half of this year.
Thomasville, Ga.-based Flowers submitted the winning bid in U.S. Bankruptcy Court earlier this year to acquire the Hostess bread business, which includes a shuttered Hostess bakery in Jacksonville.
Flowers already operates its own bread bakery in Jacksonville, and the company has not said if it will use both plants once the deal is complete.
Deese is stepping down as the CEO of Flowers at the company's annual meeting this week. He will be succeeded by Flowers President Allen Shiver.
(904) 356-2466