Use access key #2 to skip to page content.

alstry (36.13)

SPF's Legal Conflict

Recs

12

March 10, 2008 – Comments (2)

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?

 

2 Comments – Post Your Own

#1) On March 10, 2008 at 10:41 AM, alstry (36.13) wrote:

54% of sub-$500,000 home sellers in distressMarch 10th, 2008 · 2 Comments · posted by Jon Lansner/O.C. Register columnist

Home market watcher Steve Thomas at Re/Max Real Estate Services in Aliso Viejo reports that the number of O.C. distressed properties (homes listed by agents as foreclosures or short sales) was 5,057 last week, up 198 vs. two weeks earlier or a +4.1% change.

 

SPF has almost TWICE as many spec homes as backlog.  Let's repeat that number again, TWICE as many spec homes as backlog.  Most of those homes were under construction at the end of the year. 

SPF focuses its business in CA.  The CA market is one of the worst in the nation.  Inventory is way too high.  Home values are crashing.  AND SPF continues to build specs?

Over half the sub $500K homes in Orange County are in distress.  10% of the homes around Stockton are being foreclosed.  And its still early into the down cycle?

We punish foreigners when they dump inventory in our markets hurting our companies.  Builder overbuilding and liquidations is driving down the values of America's homes.  Trillions of dollars were borrowed against that value.

What should we do to SPF's management overbuilding and then dumping?

Report this comment
#2) On March 10, 2008 at 10:50 AM, alstry (36.13) wrote:

Layoffs keep puring in:

NEW YORK (MarketWatch) -- Lehman Bros. (LEH: Lehman Brothers Holdings Inc, the big Wall Street investment bank, will cut 5% of its staff worldwide as turmoil in the financial markets tamps down business prospects, CNBC television reported Monday morning. The report cited people familiar with the company's plans. According to Hoovers, Lehman employed 25,900 staff at the end of 2006.

Report this comment

Featured Broker Partners


Advertisement