Editor’s note: This article was first published in October 2013. It is a news and opinion piece from 30 October 2013 about Zinkia’s bond issue closing on 31 October, and “two days ago” and “this Thursday” refer to that date. Zinkia’s situation changed significantly afterwards.
A few weeks ago, Zinkia launched its much-talked-about bonds paying 11%, amid all kinds of doubts and warnings from the CNMV (Spain’s securities market regulator), which pointed out that the company behind the famous Pocoyo had negative working capital of 3 million euros and did not have the money to meet its obligations.
If we add that its turnover fell by almost 50%, it is as if Zinkia’s survival depended on this issue of 7,780 plain bonds of €1,000 each (7.8 million euros). Of course, the biggest question on our minds all this time has been the convenient timing of “raising” money just months before its previous bond issue matures.
In other words, there are doubts about whether Zinkia would have the money to repay the previous issue, and whether that is why it is launching this new one, which closes this very Thursday, 31 October.
Put another way: not having the money to meet your short-term debt (in the most immediate short term) and asking for new money (long-term debt) might have a name, and for now we won’t say it out loud. While two days ago Zinkia said it was not on the brink of bankruptcy because it is negotiating other alternatives, El Confidencial reports that as of today, less than 48 hours before the close, Zinkia’s bond issue has been an outright and absolute failure, since, according to El Confidencial, the order book is practically empty.
Personal opinion
Zinkia is not a company I have followed very closely, because I have never been able to understand to what extent a children’s character or cartoon can conquer the market. But the question an investor should ask is whether Pocoyo is the new Donald Duck or the new Mickey Mouse, or whether, on the contrary, we are looking at the end of a success built on a passing fad that is already crumbling, as its own turnover is starting to show.
In my view, a company should not stake its future on a “cartoon character”. It should be much more diversified into many other fields.
Even so, I hope they turn it into a success and avoid failure, as it is a Spanish company that has shown creativity and ingenuity. What is clear is that Pocoyo is going to need more than luck to keep going.
Featured image: Zarateman, CC0 1.0, via Wikimedia Commons.
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