So what if Amira Nature Foods (NYSE:ANFI) found some way to sweeten its guidance? The company needed to score a few brownie points after its latest financial results proved so difficult to swallow. Now that its stock has rebounded to more appetizing levels, the company can try to better satisfy a powerful craving of its own.

With the rest of its cash earmarked for a big-ticket processing facility that will cost a whole lot more than it can presently afford, Amira desperately needs to raise a fresh mountain of dough pretty soon.

Before Amira returns to the capital market for the money to cure its hunger pains, however, the company better get ready to start eating its words. Amira might want to go ahead and hold its nose. We knocked the sugar coating off the bitter truth.

Remember the onerous $144 million debt load that Amira went public to reduce a couple of years ago? The company sure gave up on that idea in a hurry. After using most of the proceeds from its initial public offering to reduce its leverage, Amira soon dug itself into another deep hole and has since gone on to saddle itself with an even more staggering $184 million debt loadinstead.

Or how about the lower interest rate that Amira kept insisting, quarter after quarter, that it would soon manage to secure? Despite all of the cheap credit available to even seemingly hopeless companies, Amira never managed to negotiate a better deal of its own, for some disturbing reason. With the interest rate on its bank debt actually escalating in recent quartersand the interest rate on its overdue payments to suppliers literally topping 20% — Amira has found itself paying such a high effective interest rate that the company might as well use a credit card to finance its day-to-day operations.

Quarterly Period*

Average Debt

Ending Debt

Net Finance Costs

Revolver Interest Rate

Trade Payables

Interest on late bills**

Effective Interest Rate***

Q1 2014

$151.0M

$140.3M

$4.38M

10.6%

$4.48M

21.0%

11.60%

Q2 2014

$144.6M

$148.8M

$4.64M

10.3%

$22.1M

21.0%

12.84%

Q3 2014

$154.6M

$160.3M

$7.60M

10.2%

$68.3M

21.0%

19.66%

Q4 2014

$172.6M

$184.8M

$6.48M

11.7%

$41.2M

21.0%

15.02%

Q1 2015

$183.9M

$182.9M

$6.40M

13.3%

$23.7M

21.0%

13.92%

Q2 2015

$183.6M

$184.2M

$7.66M

13.4%

$11.9M

21.0%

16.69%

* Fiscal year ends on March 31.

** ANFI has disclosed in its regulatory filings that the company pays 21% interest to certain suppliers for “payments made beyond the normal credit period.”

*** Effective interest rate calculated by taking the net finance cost (finance cost minus finance income), multiplying that number by four (for four quarters) and then dividing the result by the average debt for the period (figured by adding the debt at the end of the prior quarter to the debt at the end of the current quarter and then dividing that total by two).

Wasn’t Amira supposed to open a new, $65 million processing facility a few months from now, too? The last that we heard, when Amira hosted its most recent conference call near the end of November, the company hadn’t even started construction on that expensive facility yet. Amira has maintained such a modest budget for capital expenditures, in fact, that the value of its property, plant and equipment has actually declined since the company went public with big plans to expand its processing capacity – and its operating margins – by constructing that new, state-of-the-art facility.

Value of PP&E Year-end FY2012

Value of PP&E FY2013

CapEx Spending FY2014

CapEx Spending 1H2015

Value of PP&E at end of most recent quarter

$25.52M

$23.47M

$3.7M

$1.3M

$22.71M

With less than $26 million remaining in its bank account and so much high-interest debt already straining its balance sheet, Amira cannot afford to splurge on a big-ticket project like that – absent some generous help – at this point, either.

Given its inability to merely refinance the massive debt that it has already incurred, Amira probably knows that its chances of borrowing a whole lot of additional cash look rather slim (if not downright remote). The company can always choose a more viable option, however, by selling a bunch of stock — possibly at a steep discount to the market price — in a dilutive secondary offering instead.

Get ready for Amira to make its move. With the company still waiting to take delivery of the construction equipment that it ordered for its new facility way back in the springand on the hook for a hefty $8.3 million bill once those elusive supplies finally arrive – the firm needs to come up with the money to cover that expensive project fairly soon.

Maybe Amira should cross its fingers before the company decides to test its luck. The last time that Amira tried to raise money at current levels — before it even started breaking its word — the company met with such a frosty reception that it soon gave up and slashed its offering price.

A foreign rice packager based in faraway Dubai and focused heavily on sales to India — where even the most established players in the space generally trade for just a few times their annual profits at best — Amira initially hoped to go public at $13 to $15 a share but wound up settling for $10 instead and then proceeded to lose significant ground from there. Even when Amira bottomed out at $6.25 a share, however, its stock still looked pricey in comparison to the big-name industry leaders that trade on the stock exchange in the country where the company generates so much of its business. If Amira traded at two or three times its own forecasted profits, the company’s stock — currently hovering above $13 a share — would sell for a mere $3.38 to $5.07 a share right now.

Amira actually fetched as much as $25 a share less than a year ago, when its financial results started to become increasingly difficult for investors to digest. Let’s focus on a couple of glaring examples: the numbers that Amira just reported in late November (when the company initially stuck with its original forecast until its stock plummeted to a 52-week, single-digit low) and the results that the firm posted for the same quarter one year earlier (just before it staged a powerful, if temporary, rally to a record-breaking high.)

In the first case, Amira needed an awful lot of luck just to avert a potential disaster. While Amira reported an impressive 39% surge in adjusted EBITDA(earnings before interest, taxes depreciation and amortization) that allowed the company to barely meet crucial Wall Street estimates for last quarter, the firm actually relied on a positive swing in currency exchange rates – a convenient break that’s obviously outside of its control – for that entire gain. Never mind that the exchange rate for Amira’s foreign currency (the Indian rupee) actually slipped during that three-month period, making the handymultimillion-dollar gain that the company reported seems a bit curious in the first place.

The dirt-cheap tax rate that Amira claimed to pay last quarter makes even less sense. Why on earth would the company’s tax rate plummet from 30.1% to just 8.2% — a stunning 73% decline – for no obvious reason? If anything, given its celebrated expansion into the United Kingdom and the United States (countries with fairly high corporate taxes), Amira should have seen its tax rate move in the opposite direction instead.

Talk about a welcome development. If its tax rate had remained at more traditional levels, the company would have reported an unsavory miss.

Amira looked even luckier one year earlier, however, when the company managed to generously supplement its primary rice business by quietly negotiating some rather lucrative side deals that – despite their material nature – management never even bothered to discuss. While Amira likes to present itself as a specialty food player worthy of a generous premium, the firm actually relied on so-called “institutional sales” of bulk commodities outside of its branded rice business for close to half of the growth that it recorded during its most recent fiscal year. Moreover, Amira has inexplicablyposted some of its highest margins in the very quarters when the company depended the most heavily on those mysterious transactions as well.

Quarterly Period

Total Revenue

Total Branded

Percent Branded

Institutional Sales

Percent Institutional

Gross Margin

Q1 2013

$80.2M

$76.8M

95.8%

$3.37M

4.2%

17.8%

Q2 2013

$79.4M

$78.2M

98.5%

$1.90M

1.5%

22.9%

Q3 2013

$113.9M

$112.8M

99.0%

$1.14M

1.0%

26.5%

Q4 2013

$140.2M

$138.6M

98.8%

$1.60M

1.2%

21.4%

Q1 2014

$110.3M

$105.9M

96.0%

$4.4M

4.0%

20.7%

Q2 2014

$108.0M

$77.3M

71.6%

$30.7M

28.4%

24.1%

Q3 2014

$142.5M

$136.5M

95.8%

$5.9M

4.2%

24.6%

Q4 2014

$186.6M

$158.3M

84.8%

$28.3M

15.2%

26.3%

Q1 2015

$138.8M

$136.8M

98.6%

$2.0M

1.4%

22.0%

Q2 2015

$141.4M

$140.7M

99.5%

$0.7M

0.5%

22.0%

Perhaps Amira should change its entire business model. Unless the company has literally resorted to cooking its books — and we’re not saying that, just because it happened to lose a couple of CFOs and a conflicted auditing firm in less than two short years, that’s actually the case — Amira might want to abandon the branded food business and simply focus on reselling basic staples (like the wheat that it has quietly shipped to Bangladesh on occasion) instead.

For some curious reason, however, Amira seems oddly reluctant to share any details about that normally mundane business at all. Just listen to how evasive the company sounds when analysts even try to raise that touchy subject.

Analyst: “On the institutional business … can you just talk about what you sold there and why? Just talk about, strategically, how that fits in, (since), it’s hard for us analysts to model that. How do you think of that business strategically? And who specifically did we sell to, and what products were sold?”

CFO Bruce Wacha: “We’re not giving out information specifics on the actual customers, but it’s typically products that are bought from a lot of the same farmers that are providing us rice.”

Analyst: “I just wanted to come back to the institutional business quickly, because it was such a big contributor in the quarter. So just to be clear, the expectation and what you guys baked into your guidance, (is it) fair to say that came in above your own internal expectations, both on the quarter and for the year?”

CEO Karan Chanana: “We always guide conservatively. So it’s in line with how we guide and run the company.”

Analyst: “I don’t know if you guys have done this exercise. But I guess the gross margins are up, like, north of 400 basis points year over year. Can you do the walk for that? I mean, get us there from the price/cost gap, maybe some modest operating leverage. I guess you guys are saying the institutional business is margin-neutral for you, (NYSEARCA:AND) based on what you’re telling us, it doesn’t appear to be a drag. Can you guys do that walk?”

CFO Bruce Wacha: “That’s not something that we’re going to share at this point in time.”

Maybe Amira should have kept its mouth shut about the new processing facility that it still needs to build as well. Look how many times the company has “updated” Wall Street on that big construction project — without hammering a single nail — over the past year or so alone.

Amira Second-Quarter 2014 Conference Call (Nov. 11, 2013)

CEO Karan Chanana: “We plan to more than double our processing capacity by building a new, state-of-the-art facility. We remain on track to complete this facility by 2015.”

Amira Third-Quarter 2014 Conference Call (Feb. 25, 2014)

Analyst: “Can you give us an idea of what the cadence of CapEx spending will be for the next four or five quarters, given the expectation that you will increase your spending on the new facility?”

CEO Karan Chanana: “Before the end of this financial year, which is March 31 (2015), we will be spending approximately between $12 million and $15 million. And the balance will be in the next financial year, as we build out the plant.”

Analyst: “Can you confirm, (NYSE:ARE) you breaking ground on the new facility, and do you expect it to be completed by the end of fiscal 2015?”

CEO Karan Chanana: “That’s the target so far.”

Analyst: “So the remaining CapEx associated with the facility should come through in the next fiscal year?”

CEO Karan Chanana: “That’s what our plan is for it to come through. And we’ve ordered the machinery. Everything else – the contractors, architect, all of the service providers – have been identified, contracts done. So far, we are on stream. If there is any change, we’ll let you know – not that there is, at the moment, at all.”

Amira Fourth-Quarter 2014 Conference Call (June 17, 2014)

CEO Karan Chanana: “We have recently announced that we gave a contract to Buhler, which is a Swiss-German company, for $8.3 million for supplier plant and machinery for our new facility … We remain on track to complete the facility, and for it to be operational, by the end of fiscal 2015.”

Analyst: “What (will) the CapEx … be in fiscal ’15?”

CFO Bruce Wacha: “The company has clearly articulated, since the time of the IPO, what they thought spending would be on the facility. As (the CEO) said, we’d love to have that completed by the end of the fiscal year. And so I would imagine roughly that amount that we’ve guided towards would be CapEx for the year.”

Analyst: “With respect to the facility, how do you guys plan on financing that between cash on the balance sheet, your (credit) facility and cash flow from operations? How should we think about modeling this, both for the full year and quarterly?”

CFO Bruce Wacha: “I think that’s pretty consistent with the story that we’ve told from the IPO. We’re sitting on a fair amount of cash on the balance sheet, which should satisfy a pretty significant portion of our CapEx needs.”

Amira Second-Quarter 2015 Conference Call (Nov. 24, 2014)

Analyst: “Can you give us the big buckets of the CapEx spend and an update on where you stand on the new facility?”

CFO Bruce Wacha: “There is a land purchase that will happen … So that’s item one. Item two is the equipment that we have a purchase order (FOR) with Buhler, the Swiss-German company. So when that’s ready for delivery, we will take that, and that will be that additional spend … I think our total CapEx for the year and to complete Phase I of the project is in line with what we said it was going to be before, but it’s going to be back-end weighted. We’re waiting for delivery on the equipment. When it’s ready, we’ll take it.”

(Editor’s Note: The company announced that it had placed the order for those elusive supplies almost nine full months ago.)

Analyst: “So what’s the CapEx for this year?”

CFO Bruce Wacha: “The CapEx to complete Phase I of the project, I think we’ve been saying since the IPO, is $55 million to $65 million.”

Amira better come up with some extra money in a hurry then. Take a look atthe company’s latest balance sheet.

Amira ended its most recent quarter – less than halfway through the harvest season when the company needs to purchase the “paddy” that it processes into rice – with barely $25 million left in its bank account. The company spends about $2.5 million a month on its hefty interest payments, so that balance has likely dwindled even further since that time. Even if Amira borrowed the $6.2 million remaining on its revolver and used up the $22.4 million worth of backup credit that it has arranged – depleting the capital that it needs to finance its actual operations – the company would still lack the resources to cover that expensive facility on its own.

Don’t be surprised if Amira tries to sell a bunch of stock before the company even gets around to hosting its next conference call. Amira has repeatedly promised to finish that new facility by the end of March, after all, so the company must feel awfully pressed for time at this point.

If Amira waits too much longer, the company may not get a chance to even start on its new facility ahead of that looming deadline. Amira needs to convince investors that it can actually keep its word for a change, too. Look how many times Amira pledged to lower its steep interest rate, for example, before its CFO suddenly indicated that the firm had actually put those plans on the back burner a long time earlier.

Amira Second-Quarter 2013 Conference Call (Nov. 20, 2012)

Former CFO Ritesh Suneja: “(Before) the IPO, we … said some of the low-hanging fruit in terms of increased capital efficiency was refinancing of high-cost debt … We are in the process of discussions with banks in terms of heading up a structure to refinance that and access lower cost of capital. We hope to start working on that post this earnings release and, hopefully, announce some good news in the near future.”

Amira Third-Quarter 2013 Conference Call (Feb. 25, 2013)

Former CFO Ritesh Suneja: “We had discussions in the past with all of you investors about our goal to refinance debt offshore, outside India, using a lower cost of capital. This has been our focus for the last few months. We have received term sheets from several investment banks. We are in the process of vetting the structure proposed by some of (them). I think in terms of you folks who model our business, if this is something which is put in place by around our first quarter, we will get the benefit after the first quarter and the next three quarters.”

Amira Fourth-Quarter 2013 Conference Call (June 10, 2013)

CEO Karan Chanana: “We have actually a consortium of banks who work together to give us working capital lending — which is all backed by our stock — and they are very comfortable to give us more as we keep growing. That’s exactly what they have told us in writing as well. Now, I presume your next question will be on our debt re-fi. I’m glad that, now that our year-end audited results are public, that is also something … that we are now going to be aggressively working on. We had soft conversations with a number of banks, and they were all very positive. However, everybody (wanted) year-ended audited numbers, especially since we went public in October, and so we’re actively working on that going ahead now.”

Amira First-Quarter 2014 Conference Call (Aug. 26, 2013)

CEO Karan Chanana: “We are well progressing, closing in with two banks, and we are also looking at other instruments. I’m going to be in New York the week of (September) 9th, and we hope to reach some conclusion by then in terms of what we are doing, with whom we are doing it and what the timeline for that would be. As a matter of fact, some of our existing bankers have also offered us, because we have started the dialogue that we will be paying back some of the revolver … that they might be able to give us some re-fi’s at a much lower rate from the international subsidiary. So that’s where we are right now. And I’ve always maintained that this is something we are working on, and hopefully by the end of the year, we should have something concrete.”

Amira Second-Quarter 2014 Conference Call (Nov. 11, 2013)

Analyst: “(The CFO) talked about the debt refinancing. Is the plan still to get this done in the next six to seven weeks?”

CEO Karan Chanana: “We are working on it right now. I can’t comment on the six to seven weeks, but we are working very actively. All things being equal, you should hear something from us in the next eight to 12 weeks.”

Amira Third-Quarter 2014 Conference Call (Feb. 25, 2014)

Analyst: “(On) the debt refinancing … can you give us an update there?”

CEO Karan Chanana: “We’re working on it as we speak.”

Analyst: “Any timing?”

CEO Karan Chanana: “If everything remains equal in the markets, we are targeting by the middle of April, if not the end of March.”

Amira Fourth-Quarter 2014 Conference Call (June 17, 2014)

Analyst: “The debt refinance, can you guys give us an update on that?”

Current CFO Bruce Wacha: “No. Look, that was always a big focus of mine as a banker and advisor. Obviously, it’s something we have a mind towards, and I have a focus on it as part of the company now. I don’t want to guide towards a specific date, but there are multiple opportunities and ways that we can bring a lower cost of capital to the business. I think that’s something that we’ll be pursuing in the near to medium term. The one thing that I would keep in mind, though, when we think about our debt, is … there is no financial wall of maturities that we’re facing. We have good relationships with our consortium of lenders in India, and we continue to do so. They have been supporting the business for decades, a lot of the same banks, and will be happy to continue to do so. So this is a cost of capital issue, not a financing or (access) to capital issue.”

Analyst: “Bruce, can you help us better understand – and Karan, for that matter – I guess why you guys would not or have not acted on it, given this has been sort of much talked about for several quarters, maybe? And understanding your cost of capital argument and so forth? But help us better understand why it hasn’t happened and why it would not happen in the near term?”

Current CFO Bruce Wacha: “Sure. If you’re asking for a historical look-back, the company had some different strategic alternatives it was considering during the year and, as a result, didn’t want to be out there with a big financing while they were doing that. Obviously, the change in auditors, we wanted to wait until that was completed before we did anything. So clearly, nothing’s going to happen until we file our 20-F, which should be coming in the next (few) weeks. But it is something that we could look to do in the near to medium term.”

(Editor’s Note: Amira had already spent a year-and-a-half pledging to refinance its debt by the time that the company determined – just a few months before this conference call — that it needed to replace its conflicted auditor with an independent firm.)

Amira First-Quarter 2015 Conference Call (Aug. 28, 2015) and Second-Quarter 2015 Conference Call (Nov. 24, 2014)

Nothing. No more promises, or even vague excuses. No more hopeful questions, either.

Just silence. And the volumes that it speaks.

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