Liquidator Sees Business, Share Value Evaporate

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Good news for the economy is bad news for liquidators, and right now liquidators are hurting. Woodland Hills-based Great American Group Inc., which made a name for itself handling going-out-of-business sales during the recession, saw its share value slide last week to an all-time low of 35 cents because of a continued lack of business. Shares have lost 92 percent of their value since last year.

The company handled high-profile liquidations for the likes of Circuit City, Mervyn’s and Tower Records. It went public in August of last year after being picked up for $175 million by a special-purpose acquisition company.

But liquidation opportunities have slowed dramatically as the economy hasn’t dragged any big retailers to their demise recently.

The company’s second quarter revenue was cut by about two-thirds to $5.2 million. Its auction and liquidation segment reported negative revenue of $33,000 because of penalties from unmet guarantees of auction results. That was down from $9.3 million in the same quarter of last year. The company reported a loss of $6.6 million for the latest quarter.

On Sept. 17, the company announced that Harvey M. Yellen, president and vice chairman, had replaced Thomas E. Pabst as chief operating officer.

Mike Crawford, an analyst at West L.A.’s B. Riley & Co., noted that as liquidations have dried up, there isn’t much for Great American to do these days.

“It’s just been all quiet on the western front for them,” he said. “Right now, it’s incredibly slow.”

But Crawford, who maintains a “buy” rating, said not to count the company out in the long term.

Liquidation, the company’s bread and butter, could still turn on a dime. Great American also offers appraisal and valuation services, which have remained steadier, and has stepped into other revenue streams such as home auctions and distressed loan advisory services. Though the company has $52 million in long-term debt, it won’t mature for four years, meaning that it has time to get back on solid footing.

“When they liquidated Circuit City, they proved they could earn $28 million in a three-month period,” Crawford said. “This is a company that has historically made money and I don’t think anything’s changed to prevent that from happening again in the future. The question is where it’s going to come from.”

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