Monday, July 06, 2009

Regis Corporation Messy Hair Problem

Regis Corporation (RGS) announced Q4 results and a new stock offering. Based in Minneapolis the company operates globally cutting everyone’s hair including investors. Sales and revenues are dropping as the worldwide downturn affects everyone’s pocket book. The hair-care business is not recession proof.

The company is heavily indebted so raising equity is a must. Investors should have seen this one coming. No announcement of who is underwriting or advising on the deal. So some may conclude that the lenders have taken matters into their own hands and told Regis what the deal will be and did not bother to pay an investment banker millions of dollars to convey the message.

The release included much top line information but nothing about bottom line results. They are trying to change the equity structure so per share data will change radically which is an oblique way of saying shareholders are being diluted.

Which explains why the share price is falling like a stone; 20% at time of post. As recently as May 28 the company was paying a dividend. The investors are being sheared. The board is declaring dividends which usually means everything is OK. The intellectual dishonesty is appalling because you do not look lovely darling.