APP reached agreement on a new amended credit agreement with its lead bank. Back in early June the stock took a dive on the day the company announced that negotiations were ongoing but that the first deadline had been missed. Not surprisingly the shares are rallying nicely today, up 6.5% right now. Volume is decently above average but not huge.
Beyond clearing this up, a couple of other positives might be inferred. First, the agreement allows for execution of the recently announced stock repurchase announcement. Second, although not a “fact” it is notable that a company without a full-time CFO, in violation of Sarbox, and with admittedly weak finance expertise got the deal done. This might suggest that confidence in the numbers and management team could be a bit higher.
Maybe the tide will turn. More good news might come including (1) June comps, (2) possibly better than expected 2Q results as predicted by the Lazard analyst, (3) the hiring of a full time CFO and/or other senior management, and (4) announcement of progress or even compliance with Sarbox.
Still a risk are the sexual harassment trial against the CEO and founder (although if Dov wins that would be a positive) and a possible restatement of past earnings as a result of a new CFO/achieving Sarbox compliance.
The stock has lots of issues that will keep away most investors and analysts but I think the near-term risk-reward remains favorable and if the good news listed above hits a move back to $10 is very plausible.