PMI amends agreement from requiring 500 mil anytime to only sometime!!
here is the Form 8-K by which PMI amended its earlier agreement with lenders. The earlier requirement was for PMI to hold adjusted consolidated net worth of atleast $500 million at any (or all) time. The amended requirement made by PMI is for it to hold minimum networth of $500 million ONLY when PMI's outstanding obligations exceed 50 million (which it does as of today 125 million).
The question is why did PMI request to change the requirement of maintaining a healthy networth of 500 million at anytime, to only having it at certain times? Is PMI having trouble maintaining its net worth at that level? Is it facing a liquidity crunch. There are murmurs of MI companies facing imminent bankruptcy.
By amending the requirement to always maintain net worth of 500 million, is PMI trying to buy time, and not be called out for not having a healthy net worth that meets its debt obligations?
Is this part of a desperate disneyworld accounting to stay afloat a bit longer before folding up? It is important for retail investors..both long and short to dig deeper and not be left holding the bag on this one.
With GS scam roiling the markets, all disneyworld accounting is going to come into sharper focus. Lets not be caught blindsided.
__________________________________ Form 8-K for PMI GROUP INC
Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
On April 14, 2010, The PMI Group, Inc. (the "Company") entered into Amendment Agreement No. 2 with the lenders under the Company's existing Amended and Restated Revolving Credit Agreement. In addition to making certain clarifying changes, the amendment modifies the existing financial covenant requiring the Company to maintain an Adjusted Consolidated Net Worth (as defined in the credit facility, which is described further in the Company's Annual Report on Form 10-K for the year ended December 31, 2009) of no less than $500 million at any time, such that the covenant is now effective only at such times when the Company's outstanding obligations under the credit facility exceed $50 million. As of April 16, 2010, the amount outstanding under the credit facility is $125 million.
It's not surprising that the paid bashers would try to put a negative spin on that.
An agreement requires two parties. The agreement is between large quality banks like Bank of America, Wells Fargo, JPM, Bank of New York Mellon, and PMI.
Most investors are going to see this as a positive due to the more fexible amendment to the terms.
The banks are wise as well smart. They know that PMI Group is approved with Fannie Mae and Freddie Mac. They also know that even PMI Group's subsidiary PMAC has been approved with Fannie Mae and Freddie Mac in case they need to write mi through PMAC.
The banks probably know that PMI is going to smoke it and they are going to smoke you.
So you offer no justification as to why PMI decides to water down the need to have 500 million dollar networth at ALL times, to only SOME time.
Instead all you say is PMI has agreements with quality banks like Bank ofAmerica, Wells Fargo, JPM etc.
So since PMI has an agreement with Bank of America, Wells Fargo etc...you mean to say that alone guarantees that PMI will be in good standing.
If that guarantees PMI will be in good standing, why did PMI run and dilute the need to maintain 500 million dollar networth?! PMI doesnt seem to have as good an opinon of its own financial well being, as you seem to parrot here.
And dude, are you trying to fool us by saying that companies that have agreements with banks like Bank of America, JPM etc dont go bankrupt themselves! Do you want investors in PMI to stop asking questions just because PMI has agreements with banks?!!
"By amending the requirement to ALWAYS maintain net worth of 500 million"
it should have read
"By amending the requirement to ONLY ON CERTAIN OCASSIONS maintain net worth of 500 million" is PMI trying to buy time, and not be called out for not having a healthy net worth that meets its debt obligations?