IVY ZELMAN Drinking MORE Kool-Aid?
Zelman's take on the SPF announcement from Bigbuilderonline.
Ivy Zelman, of Zelman and Associates, was not buying the talk among investors about a sale or bankruptcy filing. In a research note, she said, "Given Peterson's investment banking experience, as well as his candid responses on the conference call about the need for 'urgency' and 'decisive' actions, several investors speculated that this move was made by SPF to facilitate a sale of the company, or some other corporate restructuring. While we cannot rule out an eventual sale of the company, after talking to management following the conference call, as well as our industry contacts, we believe that this move was made to re-invigorate the company's employees in this challenging market environment and to build long-term shareholder value."
Zelman continued, "Reading between the lines, we have heard in recent months that SPF has focused on selling many of its top land parcels in markets such as California in order to generate cash and pay down debt. While we believe this was the prudent course of action given the company's leverage situation, our industry contacts reported that some of SPF's local operational managers had become frustrated with corporate's mandate to unload these strong projects."
Re-invigorate teh company's employees? Long-Term shareholder value?
Sale of the company? What is Ivy drinking to think that would even be possible? She knows SPF's liabilities are hundreds of millions more than its assets and its losing MORE millions every week it keeps the doors open. If you paid somebody $100 million dollars they wouldn't likely take SPF for a penny a share. Just look at Bear Stearns, the Fed had to give JP Morgan $30 BILLION simply so they would pay $250 million BSC? And the Bear shareholders are upset?
If SPF sold ALL its parcels of land, it probably wouldn't come close to paying off liabilities.
Right now the board is likely scared to death.....that sat on their fat back sides as the company wasted away the corporate assets. Officers and Directors have a fiduciary duty to shareholders and creditors not to commit waste. You think selling land for pennies on the dollar and building specs in this environment is not wasting assets?.......especially when you are stuffing huge amounts of shareholder and creditor dollars in your pocket.
My guess is that SPF board and executives right now are calling their insurance company and checking on coverage......my guess is that damage could reach the hundreds of millions of dollars. Right now, can anyone say DAMAGE CONTROL? No wonder Peterson says he is acting with a "sense of urgency"...everyday the board waits, damages could be increasing by the millions.
For an excellent overview of the current market conditions, I stongly suggest reading FloridaBuilder's most recent blog.
By the way, who pays for Ivy Zelman's work? Do the builders pay her to review them like S&P? Does she really charge anyone other than the builders to read what she writes? If so, I can't wait to hear how much.