seems like CT had years to cure this default and now they extend for 15 days. Why doesn't Zell ante up? How much money did this 15 day extension cost the company? seems like we are down to a "hail mary" or a default. Is this the beginning of goodbye common.
Have you ever tried doing a reconciliation of equity and these loans in order to see if the company has any equity if they give back the actuall assets?
To the best of my understanding the only thing that might effect the company beyond loss of upside and equity is the citibank. the rest are secured by specific assets which are worth more than the loans and this is the problem: if the banks can have coverage by selling assets than why would they extend the loan.
It seems to me that the only way to get the banks to extend is to offer them warrants and in that case they will share upside in asset prices.
Again, the citibank is the only one with a blanket. the rest are just specific assets and since the upside is for the most part in the accumulated loses and the cdo equities and management fees I would only care about the citibank.
only my 2 cents.
"if the banks can have coverage by selling assets than why would they extend the loan"...
... a lot of these assets are not that far above water and in many cases the costs of disposing of them would leave them at a loss in the end.
Secondly, banks have their own problems these days with tier-1 ratios, TARP residuals and plenty of bad loans and repossessions of their own to deal with. With rents and occupancy of the aggregate CT property steadily improving as they are and the archetectural index and aggregate values stablized, those banks aren't going to want another stack of hairballs to deal with quite yet when they can "pretend and extend" (as Zell would put it) for another year or 2.
If they weren't close, they wouldn't have extended it a couple of weeks to "finish it up"...
... done deal.
... right now creates a lot of the same fear in others that exists in you... and that is likely keeping many out of the stock.
If I ever learned anything from guys like Buffett, it's that the stock market is all about "anticipating" things and feeding off of the fears of others.
If may be comforting to wait for the signatures on the debt extensions but, as I like to say, the best stock investments aren't "comfortable"...
... once the signatures are in place, the stock will likely already be up 20% from it's current levels.
over the past few weeks in the $2.30 to $2.45 range and I made it a POINT to do it ahead of the debt issue being resolved.
Is there risk to doing that? Yes, there is. The best investments in the markets ALWAYS entail risks and I'm happy to tell you that the more you avoid risk, the more mediocre your returns will be over time.
With CT, I guaged the trends impacting the company, which are all positive in a somewhat agonizingly slow way when it comes to the trends in commercial RE, and I guaged the liklihood, or lack thereof, that CT would come to terms with the banks this month, then I bought the stock based on my "anticipations".
The best gains in any stock are early in a turnaround, when investor fears, and hesitancy, are at their greatest. Once CT starts looking like a solid company with little risk, It'll be selling for 7-times what it sells for today and it's upside from there, while meaningful, will be a 2 or 3 bagger at best spread over a much, much longer time horizon.
That said, given that there is risk in contrarian, turn-around plays such as CT, I always say you should diversify your holdings...
... although this is a far cry from "venture capital" investing, a good venture capitalist will put a million in each of 20 different companies knowing that 19 of them will fail and the 20th one will make him 50 million.
Diversification is NEVER out of style.
Hope this helps,
... can often see mind-boggling swings in their fortunes due to their concentrated positions. Many go from rags to riches repeatedly and many who resent them don't know the risks they take.
Look at Sheldon Adelson... America's 3rd richest man in 2007 when his majority stake in Las Vegas Sands hit $150 a share...
... in early 2009, Sands bottomed out at $1.38 a share.
Those of us who havn't made a $billion yet have the luxury of being able to diversify our wealth.