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Novation Companies, Inc. Message Board

  • ironroad45 ironroad45 Apr 19, 2007 12:56 PM Flag

    Question; Can NFI defer carryover dividend to years end

    I think they can...and should.

    By deferring the carryover dividend to maximun time NFI has use of the liquidty(cash) at NO CHARGE(no interest cost).

    NIF can and will defer carryover dividend to the end of the year.

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    • Why is this so hard to understand?

      • 1 Reply to ironroad45
      • The state concerning prior history does not state that it has no bearing on the future - it is not a guarantee

        Anyone who ignores past history must accept the consequences of human nature, namely people tend to act in a particular manner which can [although not always] frequently be an indicator of how they will act in the future.

        In this case NFI management published a schedule a little over a year ago to make the timing of dividend payments more predictable to their investors. They have, at least until now, conformed to that schedule [at least as to the timing of their declarations].

        In the February conference call management indicated that they had sufficient cash on hand to cover reserves and the distribution of 2006 income to shareholders. When asked how much the distribution would be they responded - divide the available distributable income by the number of shares outstanding.

        Based upon what happened before the conference call, what happened at the conference call and everything that "management" has done since, they appear to be following an established course of action that is likely to continue into the short term future. While there is, of course, no guarantee of future performance - the past has always and will continued to be a strong indication of what will take place in the future.

        Historically Novastar makes a minimum of four regular distributions per year and an occassional special distribution. They have already indicated that the first distribution for 2007 was made on December 31, 2006 and that the balance will be made during 2007 as directed by the Board. While the board's action cannot be guaranteed based upon what appears to be current management policy the remaining distributions will be made in May, August and November.

        That would be three installments the first of which is likely to be on May 31, 2007.

        While others may speculate based on the likliehood of a sale or change in structure that is unlikely to happen until "after" the next date when deREITing is possible for tax years "after" 2007. Which means a sale or change of structure is unlikely to happen until after December 31, 2007 when the market price of common is likely to have recovered to its pre February level and buyout with a premium over that.

    • possible, but not likely based on this management's prior history.

      a delay at this point would not help "shareholder value" and would not make sense if, as some have suggested, their seriously interested in marketing the company for either a sale or merger [either of which is unlikely until the current REIT status can be changed]

      • 2 Replies to nfialert
      • If this is correct why announce now rather than later in the year????

      • Your idea of prior history just rubs against the grain and counter to most disclaimers; i. e. "Past performance has no bearing on future performance".

        And as you say "...delay(of paying out the carryover dividend)...would not make sense...their seriously interested in marketing the company..."

        It makes MORE sense to market the company with the 'carryover dividend'(cash on hand) for the simple fact of the high cost of capital. The cash would be an asset and the cash can be used "FOR FREE" instead of paying Wacovia the cost of using there credit line.