PriceSmart Makes Money Moves.

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Author: Unknown

Section: FINANCE

BEHIND THE NUMBERS

PriceSmart Makes Money Moves

A monthly report for the retail CFO

PriceSmart, operator of membership warehouse clubs in the Caribbean, Mexico and the Philippines, has written itself a detailed prescription for improved financial health.

The company is hoping the financial moves will remedy the ailments of interest expenses and preferred dividend obligations. The key moves are to repay debt and exchange common stock for preferred stock. The company also hopes the moves will help it get better terms from vendors.

Key components of the new financial structure include:

• the repayment of $45 million of debt with the company's common stock

• the exchange of the company's common stock, valued at $10 per share, for $22 million of Series B preferred stock

• modifying existing relationships with the company's major lender

The moves also provided the basis for the settlement of two class-action shareholder lawsuits. In December, PriceSmart restated financial results for seven quarters in 2002 and 2003. The company said it had inflated sales during that period by more than $29 million, leading to several shareholder lawsuits.

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