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  "docSlug": "207d3ac66ddd",
  "documentTitle": "Canadian Tire Corporation (CTC.A)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Spruce Point Capital Management",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-12-05 00:00:00",
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  "pageNumber": 14,
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  "notes": "Includes a waterfall-style calculation of cash flow available to pay down debt and a calculation of required paydown vs. capacity.",
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      "kind": "callout",
      "text": "7.5+ years Required to delever based on LTM FCF and assuming no return of capital to investors. We believe CTC will not be able to reduce its leverage by the end of 2020 without selling assets",
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      "text": "Our analysis shows, CTC does not have the required free cash flow to maintain its current level capital returns and reduce its leverage",
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      "text": "Adj. Net Debt/Adj. EBITDAR Leverage: 3.45x",
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      "text": "We believe it will be difficult for CTC to reduce its leverage to the level necessary to maintain its current credit ratings. Equity investors and sell-side analysts are accustomed to a combination of share buybacks and dividend payments. We believe if the Company does not reduce the current capital allocated to buybacks and dividends, CTC will not have the necessary cash flow to reduce its leverage. Investors will be disappointed by the reduction in capital return plans and will be surprised by a potential credit downgrade given sell-side analysts positive view on the Company’s financial position.",
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      "kind": "source-note",
      "text": "1) Reported in cash flow from financing due to IFRS 16 (YTD Q3'19). Q4'18 is reflected in cash flow from operations 2) Net debt adjusted to include purchase of Party City Canada 3) Reflects Q4'18 rent expense and Spruce Point estimated Party City Canada LTM rent Source: Company financials, Spruce Point analysis",
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      "text": "Cash flow and leverage calculation tables",
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      "kind": "title",
      "text": "Significant Risk Of Credit Downgrade",
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