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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",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-12-05 00:00:00",
  "orientation": "landscape",
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  "pageNumber": 66,
  "pageCount": 108,
  "prevPage": 65,
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  "slideType": "preempt_rebuttal",
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  "notes": "The slide uses a 'villain critique' style by contrasting the reality of credit metrics with the optimistic view of sell-side analysts.",
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  "slideHref": "/slides/019dd923-622c-750b-8b98-d4565c313b68/66",
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  "components": [
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      "kind": "callout",
      "text": "It is prudent for CTC to reduce its leverage to maintain its current rating. A downgrade would result in a rating on the cusp of non-investment grade (junk) status and potentially higher cost of capital.",
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    {
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      "kind": "metric",
      "text": "Debt/EBITDA: 5x",
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      "toolName": "Quantification",
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      "componentId": "019dd952-ee3b-7248-a1a3-29bd0b15be72",
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      "kind": "paragraph",
      "text": "Rating agencies have warned that current ratings are based on the anticipated ability to deleverage and sustain a lower level of leverage. Moody’s report states that CTC must raise its EBIT/interest coverage ratio – this is concerning for a business which is experiencing declining EBIT margins. Sell-side analysts and equity investors do not pay enough attention to the possibility of a potential downgrade and sell-side analyst publications mention CTC as having a strong capital structure and tremendous financial flexibility. It is prudent for CTC to reduce its leverage to maintain its current rating. A downgrade would result in a rating on the cusp of non-investment grade (junk) status and potentially higher cost of capital.",
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      "kind": "quote",
      "text": "CTC's commercial paper rating could be downgraded to P-3 if a material weakening of liquidity occurs at any of its three business segments, if a material deterioration occurs in the bank's credit card portfolio quality or capital levels, if a deterioration in Retail market position occurs, reflected by sustained weakening of comparable sales and declining profitability or if it sustains consolidated adjusted Debt/EBITDA above 5x (4.8x for LTM Q1/2019) and EBIT/Interest below 4.5x (3.9x for LTM Q1/2019). — Moody's Rating Report, June 7, 2019",
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      "kind": "source-note",
      "text": "Source: Rating agency reports, Equity research reports",
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      "kind": "table",
      "text": "A table-like structure mapping sources (DBRS, Moody's, BMO, S&P, TD Securities) to their specific credit warnings or commentary.",
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      "kind": "title",
      "text": "Need To Reduce Leverage To Maintain Current Credit Ratings",
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