HansHauge (44.50)

The collapse of Palm Harbor Homes today explained.

December 19, 2008 – Comments (1) | RELATED TICKERS: PHHM , TXT

I was pleasantly surprised to see Palm Harbor Homes take a bitter nose dive today so quickly after I predicted that it would. Today shares fell 34% from $7.21 to $4.61.

After a bit of research it turns out that bank they were bragging about owning is called Textron Inc, which was recently downgraded by Standard and Poors to (BBB+/Negative/A-2).

And actually it seems that Textron loaned them 70 Million dollars back in 04' Sounds like Textron owns them.... (maybe a shorting opportunity?)

On May 25, 2004, Palm Harbor Homes, Inc., a Florida corporation (the “Company”), and its wholly-owned subsidiaries Palm Harbor Manufacturing, L.P., a Texas limited partnership, Palm Harbor Homes I, L.P., a Texas limited partnership, and Palm Harbor Marketing, Inc., a Nevada corporation, as borrowers (collectively, the “Borrowers”), entered into an Amended and Restated Agreement for Wholesale Financing (Finished Goods - Credit Facility) (the “Credit Agreement”) with Textron Financial Corporation, as lender and administrative agent and arranger (“Textron”), for a $70,000,000 credit facility.

http://phx.corporate-ir.net/phoenix.zhtml?c=116737&p=irol-SECText&TEXT=aHR0cDovL2NjYm4uMTBrd2l6YXJkLmNvbS94bWwvZmlsaW5nLnhtbD9yZXBvPXRlbmsmaXBhZ2U9NTk5MDMzMiZhdHRhY2g9T04mc1hCUkw9MQ%3d%3d

The goodwill impairment of about $170 million at TFC, coupled with restructuring charges, will reduce TFC's fourth-quarter 2008 earnings to a level that will require Textron to make capital contributions to TFC of about $200 million in the first quarter of 2009, with additional contributions likely in subsequent quarters, to maintain compliance with financial covenants under Textron's su... An increase in the provision for credit losses and higher funding costs have significantly reduced TFC's earnings and prompted a strategic reevaluation of certain business lines. Providence, R.I.-based Textron has leading market positions in selected segments of aircraft manufacturing (Cessna business jets and Bell helicopters), solid performance at Cessna, fairly steady results of expanded defense operations, and sufficient cash flow for operating needs and required capital contributions to TFC.

http://www2.standardandpoors.com/portal/site/sp/en/us/page.search/search/0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0.html?searchKeywords=textron&page=0&dateRange=&category=&resultsPerPage=10&languageRegion=EN_US&sortby=RELEVANCE&format=&similarId=5875036