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Life Partners Holdings, Inc. Message Board

  • lonesometrain lonesometrain Jan 11, 2013 10:36 AM Flag

    Life Asset Trust Valuation

    Some on this board have mentioned that the 19.9% interest in the Life Asset Trust should be written down.

    Let's take a look at the 10Q's and see what's happening. Specifically, check footnote 12 of the financials.

    At the end of Q1, May 2012, the trust owned 259 policies with a face value of $680 million.

    At the end of Q2, August 2012, the trust owned 252 policies with a face value of $653 million.

    At the end of Q3, November 2012, the trust owned 236 policies with a face value of $621 million.

    During this nine month period, LPHI had net cash in flows from the trust of $82K ($691K - $609K),

    Some questions that the financial disclosures do not answer:

    Were there maturities that LPHI did not receive proceeds from?

    Were there policy lapses that reduced the number of policies and face value?

    Were policies sold that reduced the number of policies and face value?

    Unless I am missing something, this information would seem to support the position that the asset should be written down. Maybe that's something that gets done at year end.

    In this case, face value is down 10% (almost $60 million) but the investment carrying value is the same.

    If there is debt, and if I recall correctly, one of the earlier 10K's showed something like a $100 million bank loan at the trust, the impact to the equity holders would be even greater.

    Don't know the answers to any of this, just how to ask the questions.

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    • LPHI keeps stating in the 10-Qs that they examined the trust and have found no reason to impair it. If that is the case, IR should be able speak in detail about the trust. Let's find out if that former shipping clerk and/or the new CFO will do so.

      This is important since the Pasadena Pumper contends the trust will bail out LPHI. I am beginning to think the trust is just another losing asset that will cause LPI and the other investors an eventual loss.

    • David Martin once confirmed through IR that an unusual line item was indeed for a line of credit for the trust. Assuming a 1% cost the trust was leveraged to the tune of (roughly) $100 million, a significant amount.

      The trust is pre-2008 VBT and that fact alone warrants a write-down. But seriously, there are way too many policies left in the trust for it to be performing anything close to the original expectations. if fact, the trust may be a cash drain by now. Why a cash drain? Because of the bogus way LPHI accounts for it, adding expenditures to the balance sheet asset without first impairing the asset.

      Several years ago there was a special dividend representing a distribution from that trust. Now everything is hidden...and things are hidden for a reason.

      The new CFO has to account for this properly because her name is on each filing. I hope she knows what she is doing, because getting stuff like this wrong could end a career.

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