Arctic Glacier Income Fund announced that its U.S. subsidiary, Arctic Glacier International Inc., has reached agreement with the U.S. Department of Justice. The agreement settles all charges related to allegations that three former employees conspired with a co-conspirator company from January 2001 through July 2007 to allocate packaged ice customers in southeastern Michigan and the Detroit metropolitan area. Arctic Glacier initially entered into this market in 2005 when it acquired shares of certain companies in that market. Because it acquired shares it assumes liability for such practices and conduct in those predecessor companies. Under terms of the agreement, Arctic Glacier International Inc. agreed to plead guilty and to pay a fine of US$9 million, payable in instalments over the next five years. Arctic Glacier has also agreed to cooperate with the DOJ's ongoing investigation of other companies and individuals. The agreement remains subject to court approval.
The shares opened up 120% this morning.
Unfortunately, I did not have a position. This is just another example of why it makes sense to bet against the crowd.
The entire company is now trading at $156M in the market. Average cash flow has been about $30M for the past 4 years. If you take out tax they will have to pay once they convert over to a corporation, whenever they decide to do it, they are likely to produce $24M of cash. Therefore, the stock still looks cheap at 6.5 times. The packaged ice industry is the type of stable industry you would expect to be trading closer to 13 or 14 times.
SG
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