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NorthStar Realty Finance Corp. Message Board

  • ringhofer2000 ringhofer2000 Dec 12, 2013 11:24 AM Flag

    world gone crazy

    5 days ago the stock was in the $9.75 range, with everyone able to understand the assets, business model, earning prospects, competition, etc. They announce the are cutting the pie into 2 pieces and the stock goes to $12. The craziest thing is that the company then announces selling 50plus million new shares at $11.65 (a 16% premium over its price a week ago and less than a 3% discount from its surge high of $12) and people jump on it. Cutting it into 2 pieces did not increase the earnings, assets, etc. People do not even know how much debt NRF is going to assign to the new entity and how much will be left behind. Hard to imagine that there are enough foolsgh people to snap up the 50plus million shares (probably closer to 55M after the underwriters ask for the typical over alotment). NRF's preferreds may be ok with this huge secondary, depending on how much of the debt gets assigned to the new entity.....however, even the preferreds' owners will be wary about the diminished earnings available for NRF to pay out dividends and the smaller assets available to cover the preferreds. With the competitive enviroment for BDCs the vields for sound creditworthy new deals is inching down, meaning the new NRF cash will not bring in the same pro rata income as the old absent increasing credit risk. All in all, shocking secondary.

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