SPF's Legal Conflict
SPF owes its revolver and Term A and B banks almost $500 million dollars.
SPF owes its senior bond holders over $1 Billion dollars.
SPF management knows that it is inflating the value of the assets on the books. It only has a few hundred million in the bank. It knows that the business outlook for the foreseeable future is negative. Management knows they are going to lose hundreds of millions in 2008. They know they have hundreds of millions of dollars of spend obligations in 2008. Management knows that they don't currently have the resources to pay off the above and their suppliers.
Everyday management keeps the doors open, they stuff fanstastic salaries and accumulating bunuses in their pockets, and less and less remains for creditors, and even less for shareholders.
Here is management's problem,.... if they tell the world how little the current value of SPF's assets really are, the banks will likely cut off the revolver facility and mgt can't keep paying themselves as they liquidate the company for pennies on the dollar.
That would be a good thing the for SENIOR debt holders because they would likely get much more money than they would supporting exectutives wonderful lifestyle. However, if mgt keeps the inflated asset charade going, they can float the revolver bank syndicate a few bucks as management keeps lauging its way to the bank.
The question now is when will SPF's management come clean to the world and who will they pay?The senior debt holders or the bank syndicate? assets are evaporating everyday and less and less is available to pay off debt................shareholders are so far back in line the movie will likely be over before they ever get to the window.
Mommy, why are those executives driving such expensive cars when they are losing so much money?