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  "docSlug": "207d3ac66ddd",
  "documentTitle": "Canadian Tire Corporation (CTC.A)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Spruce Point Capital Management",
  "documentKindSlug": "activist-deck",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-12-05 00:00:00",
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  "pageNumber": 15,
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  "slideType": "preempt_rebuttal",
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  "nDataPoints": 75,
  "notes": "The slide uses a red bracket and callout boxes to highlight the impact of $1bn+ in guarantees on the final leverage ratios.",
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      "kind": "callout",
      "text": "Leverage is significantly higher than it appears",
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      "kind": "callout",
      "text": "$1bn+ of guarantees not included in debt calculations",
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      "text": "Net Debt / EBITDAR: 5.4x",
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      "text": "We believe sell-side analysts are underestimating Canadian Tire's total exposure. This explains sell-side comments of CTC's strong financial flexibility while the rating agencies warn of a downgrade without reducing leverage. The most worrying factor is the lack of consistency between analysts' debt calculations. We believe the correct calculation is to consider all Canadian Tire's obligations including each controlled entity and guaranteed third party loans.",
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      "kind": "source-note",
      "text": "Note: Q3'19 LTM EBITDAR of $1,986; 1) Dealer loans primarily relate to loans issued by Franchise Trust; 2) Guarantees of third-party bank debt agreements",
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      "text": "Debt calculation table comparing Spruce Point, TD, Scotiabank, Canaccord, and CTC Reported figures.",
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      "kind": "title",
      "text": "True Exposure Is Significantly Higher",
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      "evidence": "The slide explicitly argues that market participants are miscalculating debt by omitting guarantees, a classic activist short thesis.",
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      "evidence": "The document identifies several problems with Canadian Tire's business model, including its overleveraged and debt-fueled model, deteriorating cash conversion cycle, and intense competition.",
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