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Countrywide Capital V (New) 7.0 Message Board

  • wzyzy wzyzy Oct 2, 2008 10:54 AM Flag

    Should BAC garantee CFC-PB?

    It's basically junior subordinate debts. Anyone got an answer yet? I am sending email to them.

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    • rematter,

      I also spoke with BAC IR representative Kevin Stitt on Friday. He made no promises to me that my dividend would eventually be paid, though he did seem to think the issue would eventually be resolved. He simply said they paid Bank of New York and that the issue was between Bank of New York, DTC and my broker. (FWIW, I'm pretty sure a court would not concur with this opinion since the dividend is a legal obligation of Countrywide Financial - not Bank of New York - so any litigant would begin by naming Countrywide Financial and their parent company, Bank of America. The theory that Bank of New York absconded with these funds is something that BAC / Countrywide would need to settle as a separate tort since as a CFCpA shareholder I have no contractual relationship with the Bank of New York / Mellon.)

      While I do suspect future payments will be paid, I still have:

      1) No hard evidence that Countrywide / BAC is actually making the Countrywide Capital Trust dividend payments; and,

      2) No reason to believe that next month's CFC-PB dividend will actually show up and remain in my account.

      Also, I have noticed that the Bank of New York Shareholder services website (https://www.stockbny.com/UI/Resources.aspx?tab=tabResourceCompanyList) does not list either Countrywide or Bank of America as client companies even though Countrywide lists them as their transfer agent in their last 10Q. While this tends to support the notion of BONY resigning as Transfer Agent, it is far from conclusive. But since that seems to be the case, I imagine BAC and Countrywide will need to engage another agent before any future payments are made - which should bode well for those dividends ... but only if BAC has been forthright about the CFC-PA payments. Since I've not personally seen any comments from BONY, I still cannot judge the likelihood that future dividends will continue to be paid.

      - Joel

    • I spoke to IR. They told me that Bank of New York - the trustee for the debtholders of CFC - absconded the original payment to the countrywide preferreds to protect the bond holders in the lawsuit since their claim is that they should be paid in full. Bank of America RE PAID - a second dividend DIRECTLY to the holders via the brokers - THUS the delay in receiving payment. They said they no longer would be sending the payment to bank of new york and it was a one time problem. Pending the outcome of the lawsuit. It's possible also that we win that lawsuit and BAC assumes all debt and preferreds at par per the claim.

      BUY all you can stomach - the fall this and last week is based on fear that the dividend would be stolen or halted. Bank of America paid it twice. That looks to me like they are backing CFC preferreds...

    • well done joel -
      we will survive this - to much negativity
      by posts and press - to late to pull out
      now - lets talk in about this in two weeks -
      later rog

    • That's excellent news: as investors, we're reading tea leaves here, and it looks like BofA truly does want to integrate the Countrywide acquisition.

      Thanks for your efforts! Great due diligence!

    • I believe if you check the prospectus, you will find that it states that anyone who acquires Countrywide, must guarantee the debt. Since B of A acquired Countrywide, I think they must guarantee it.

      • 1 Reply to SCVC1999
      • SCVC1999, you write:
        "I believe if you check the prospectus, you will find that it states that anyone who acquires Countrywide, must guarantee the debt. Since B of A acquired Countrywide, I think they must guarantee it."

        BofA did not acquire Countrywide, a 'merger subsidiary' acquired CFC. That merger sub had no assets other than the 106+ million shares of BofA stock needed to pay CFC shareholders for their CFC stock. That is how it works. If BofA elected to guarantee the debt of CFC (now the merger sub), then they probably would tank their own credit ratings. Why would they choose to do it? There is no guarantee on this one. That is reality -- these trust preferred have no recoure to BofA the parent. Implicit guarantee perhaps -- but we know what that is worth in court, right?

 
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