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  • ethison ethison Jul 2, 2009 9:06 PM Flag

    RAS Picture will be more Clear after CDO dump

    Yes, I understand the structure of RAS.

    Perhaps you are not aware that RAS has about $400 million in recourse debt. That is $400 million in convertible notes due in 2012.

    RAS has a multitude of SIVs and the fees that are generated from them. It has a bit of cash and about $400 million in debt. Thanks to GAAP it's a very convoluted balance sheet. RAS also has a bit of prefered stock.

    AFN has the same structure without the prefered stock.

    Most of AFN's debtholders settled for 30 to 50 cents on the dollar. So, my question still stands: Will the RAS debtholders settle for pennies?

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    • it also has real estate owned, which RAS just created a joint venture to manage. By definition, that real estate is currently unencumbered.

      My recollection is RAS purchased some of the junior notes at a large discount last quarter. I expect they will continue to try to do so.

      If they actually turn the real estate into a profitable asset, they can mortgage the real estate to pay the junior notes.

    • I didn't know you were talking about the 2012 notes, why did you ask when they will turn the keys over to the debt holders? Or are you just being cute?

      RAS is very easy to understand, it consists of two commercial CDO's that are flowing cash, and a bunch of sideshow securitizations that aren't (aside from fees) and won't in my lifetime. If RAS survives to 2012 flowing a buck AFFO per year, the notes will not be a problem! Three years is a lifetime, the triggers on the two commercial CDO's are all that matter.

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