Get Ready for the SPF Pump
Will Wall Street try to dump a new SPF offering on the public or is it simply a hope and a prayer by SPF management deceiving themselves into thinking they can raise money?
Today, SPF SEC registration to raise upto $600 million became effective. Now the question is who in their right mind would loan this company a dime with the following facts in place:
1) Material JV obligations
2) Concentration of land holdings in the most challenged markets in America-CA, FL and AZ
3) Over 2 Billion in debt-almost 5X backlog
4) and last years performance as indicated in the S-3:
For the year ended December 31, 2007, our earnings were insufficient to cover fixed charges; the amount of additional earnings needed to cover fixed charges for such period was $655.3 million.
This year selling prices and sale pace is lower and slower than last year. Much of SPF's current land holdings have NOT been impaired yet. It is very likely that SPF's 2008 financial performance will be worse than 2007 if conditions simply persist and don't deteriorate any further.
Who is kidding who that anyone would lend a company facing the above headwinds a dime?