the result of Franklin Templeton-Mutual
dropping more shares. They were I believe
holder (and earlier in the year when
the big blocks
traded and pushed the price so low) I
were likely responsible for those also.
results have been poor and people are
shares, and they are having to reduce/liquidate
positions. Although I expected them to be out already.
am not too concerned, in fact the last time
happened, it was a time to buy.
Things have become
more clear now, and while the price
is higher than
the last time big blocks traded. I think
closer to recovery than we are a worse downturn.
just know more about the likely outcome.
Your logic is compelling, but I'm concerned about
someone dropping tons of shares on the market at the end
of trading on a Friday. Either we have a fund
manager trying to dress up his portfolio before EOQ, or
we can expect some really bad news early next
Seems like VTR is the buy if what Kuntz says is
correct that the current shareholders will have little if
any value if the company(VC) is able to restructure
its capital structure.That statement would imply that
the Banks,Bondholders,and VTR would trade debt and
rental reductions for equity.
While that is not
good news for the current VC shareholders,it could be
good for VTR for the following reasons:
1.Assuming that debt is reduced by $500,000,000,that would
reduce interest expense by $45,000,000 (9%)and increase
cash flow by same amount annually.
VTR reduces rents by up to 15% as one analyst
indicated,that would be $34,000,000.That increases VC cash flow
by $79,000,000 annually including interest and
reduces expense by same amount.For 1999,that should
enable VC to have a profit of $47,000,000.(79,000,000
less 32,000,000 projected 99 loss based on 1st
quarter)This is why the Banks,Bondholders and VTR would trade
for equity because they are much better off than if
3.VTR should still be able to
pay at least $.90/share dividend with the rental
reduction.Hopefully,VTR would also receive larger rent increases in
future years so dividends should increase.In
addition,with VC now being a better credit risk,VTR should
trade with a lower yield which would increase VTR share
So while a capital restructure by VC could be bad
for the current VC shareholders,it could be good for
Annie,you asked who or why buy these companies.
It is because there is value still in the LTC
industry. A reasonable profit can be made. Howeever,before
that happens,some major overhauling is needed. Somehow
these companies must get rid of the money losing
facilities and focus on the profitable ones. Is bankruptcy
the only way to accomplish that? I don't know.
To find out what banks lend VC and VTR money, go
to the latest Edgar filings. Any bank agreements or
amendments will be attached as exhibits, which would include
the signature pages, which will tell you who the
banks are, but not how much each is holding. Good luck.