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Foamex International Inc. (FMXI) Message Board

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  • texasbroker2000 texasbroker2000 Aug 15, 2005 9:48 PM Flag

    Your input sought on FMXI

    You might be right that they will file chapter 11 but you're wrong about that limiting shareholder suits and avoiding environmental issues (if there are any).

    Do you really think that management can wash out shareholders and subordinated debt holders in a pre packaged scenerio, feather their own nest and become a private company owned/financed by the existing senior debtholders? Add to that that current management has never mentioned bankruptcy as an option until now and as recently as the second quarter told shareholders that the sale of the carpet cushion and current cash/credit lines were sufficient to meet this August 15 payment.

    Finally there are financial advantages (Sarbane) for private vs public but they are a drop in the bucket to the costs of operating in bankruptcy. The courts control the situation and the banks (senior lenders) lose control no matter what the intention of the pre packaged plan is.

    Debt is really the only problem with this company...they have positive operating earnings and now that Cogan is gone the bloated overhead is being phased out. They don't have any real unfunded pension issues or labor issues...it's all about the debt for now.

    Many have pointed out that long term China will prove to be the ultimate demise of the domestic suppliers and that's clearly a trend but still a way off.

    It's a coin toss but this could be one where there is a suprise....I'm sure that we'll know soon.

 

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