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Magnetek, Inc. Message Board

  • down_the_middle_320 down_the_middle_320 May 10, 2005 9:16 AM Flag

    Quality guy

    this new CEO appears to have the right things under his belt, could be awesome for this little company going forward...gotta get this settlement stuff out of the way...

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    • I agree with your post...great little cat and mouse game going on...caution to all longs at this moment, imho.

    • I am thinking about taking a big position in this stock. I love distressed companies with good businesses.

      You'd be surprised how the world is jam packed with idiots. The employees of UA today are rioting because the judge is allowing the company to transfer Pension liability to the Pension Guaranty Trust which all of us taxpayers will pay for.

      However, this is becoming the trend in court decisions. Therefore, I agree with you on your posts. The pension liability on MAG's books would most probably be transferred to the Pension Guaranty Trust by the courts. This would remove this as a settlement obstacle to Nilssen.

      The 20 million to Nilssen is dilutive and potentially can impact eps if there is a note in the settlement.

      I have been looking at MAG for a long time. It has excellent patents and product potential for the future. This agreement needs to be less than 25% dilutive to shareholders and it needs to have any note component held as convertible by the company.

      Then the extent of this overreaction can be calculated. Of course, you've got to get in where you think the worst case may be. I think we've hit it.

    • ...You're correct and good point on the accounting for the pension liability. Been a long time since accounting 101!

      Let's simply hope that the major players here are rationale people and act for the better good of all concerned!

      And yes...In the days ahead we will of course probably know which way this is going by following the money trend either in or out of this stock...There are few well kept secrets on Wall Street....

    • fghton,

      If you back out the pension benefit, you have to back out the pension liability (or offset them). You can't just back out the benefit and leave the corresponding liability intact on the balance sheet.

      When you do that, you still wouldn't qualify for reorganization. The intangibles are worth a lot of money, ...they aren't worthless and Ole knows it. He understands patents.

      On the other hand, if the current management would rather sink the ship, they have that option. But, I feel a judge, just like this arbitrator will see through it.

      I still think Ole walks away with 25-30% of the company, by hook or by crook.

    • All three of you make compelling arguments, and while I don�t think Magnetek will pursue bankruptcy proceedings, the possibility certainly exists.

      This now leads me to the saga of North Point Communications, and while the circumstances are entirely different, something comes to mind. In 2001 VZ pulled out of a merger with North Point and the blogs were full of speculation. Two trading days leading into an abrupt NPNT ch11 filing, the stock ran almost 200%. Now I�m not suggesting that this will happen in anyway, nor do I think Magnetek will file for BK protection, I am only pointing out to follow the smart money.


      Long MAG 10k shares

    • ...You guys may not frankly understand how a Chapter 11 proceeding would work here. The company in fact said that Bankruptcy was an option of last resort but it is an option, make no mistake about it.

      If you back out goodwill from the balance sheet plus "pension benefits" and add Ole's 23 million in debt to the liability side, MAG has a negative net worth...enough most likely to qualify them for Chapter 11 protection.

      That would not be the end of the world. Ole is merely a judgment creditor at this time.
      He would therefore stand in line with all the other unsecured creditors. MAG would get leave of Court to pay the necessary unsecured creditors as due so business would continue on as usual. If push came to shove Ole might ultimately get only pennies on the dollar. But more likely the BK would give MAG time to come up with a viable solution to satisfy the judgment. Ole would be stayed from executing on the judgment and all other litigation against the compay would be put on hold by the BK Court. In the interim MAG could either sell assets to pay off the judgment or simply shop the company for sale. But what they may well need is time to explore those options. If the creditor gives them this time great...If not they frankly do hold the ultimate trump card IMHO...

    • Get a cup of coffee! He was part of the Board that over the last ten years couldn't even develop a succession plan for a chairman of > 70 years old. Doesn't it stike you as a bit unusual that there wasn't a single manager who could step up and be promoted? BOD's have a responsibility to insure continuity of management. This appears to be a move to assess what the real plan is going forward. Anyone think that T. Boren will be a 40 hour a week working manager and will move permanently to LA? I'll alter my thinking if a few of the technology people are eliminated in the first month, if no other changes occur quickly, assume that this Boren individual is at best a caretaker.

      • 1 Reply to tropism1
      • Tend to agree. Must be an extremely incompetent BOD not to even have a back-up plan and revert to a Board member to run the company. Good point as to his relocation and commitment, anyone else have specific facts as to how he will "manage" the organization? Hard to project the next quarter when MAG will post a positive EPS, given that Boren was as responsible for the historical decisions as previous management, sort of have to expect more of the same.

        Does the company get a refund for Galef's service fees for the previous 20 years if BK is the final solution<

    • This POS is dead forever. They have no cash, I personaly spoke to the Ex CEO and he said they will use line of credit at hi intrest. Go look at PROX and how a simple tech law suit and small cash postio killed them. This one is on its way to 0.

    • The settlement will be very interesting. If I am right, this will be at least a 2 banger for the stock. Maybe more.

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