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Assured Guaranty Ltd. Message Board

cohsgrad 339 posts  |  Last Activity: 19 hours ago Member since: Feb 27, 2000
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  • cohsgrad cohsgrad 19 hours ago Flag

    That is a misleading post but sometimes posting something provocative is useful.

    I think the sector is in a world of hurt due to excess capacity. Dragonwave is the weakest company and had it gone out of business either by selling out to one of the companies or going bankrupt the sector would be more profitable (or lose less money). Does not appear as though that is going to happen anytime soon but someday it will happen. It literally could be a decade if people continue to throw money at businesses losing money.

    Ceragon has a chance (emphasis on chance) of succeeding. Aviat doesn't have much of a chance but maybe a good restructuring with new management would change that. Even Dragonwave with new management might stand a chance but as long as the share price remains sky-high it makes it very difficult to make changes. The one caveat for Dragonwave I would add is that if for some reason NSN decided to let them earn some o.k. margins. I'm not sure why they would given that they have never done so in the past but if that happened I think DRWI would become viable. Right now people are paying an awful lot of money for DRWI shares for reasons that I do not see. At least with CRNT you stand a chance of making money. With AVNW prices a few months ago that was true too.

  • Reply to

    liquidation

    by dsommerl Oct 14, 2014 2:16 PM
    cohsgrad cohsgrad 19 hours ago Flag

    Perhaps I am wrong but I don't think there is any way to avoid the bankruptcy now as the court controls things and indirectly Wells Fargo as they are the ones who provided the DIP financing which apparently they are using to at least in part pay back earlier loans.

    I think the only real goals of equity holders at this point in time are (1) make sure that the new board and executives do not benefit financially from the bankruptcy or at least not too extravagantly and do not purchase any assets and agree not to participate in future management of those assets, (2) conduct a reasonable inquiry to make sure they didn't commit fraud (I don't think they did) and (3) have a fair auction and it seems like that is going to take place.

  • Reply to

    liquidation

    by dsommerl Oct 14, 2014 2:16 PM
    cohsgrad cohsgrad 20 hours ago Flag

    That is probably a good idea. Someone also needs to petition the court for an equity holders committee.

  • Reply to

    Stalking Horse Reply

    by superbowl6wins Oct 19, 2014 3:54 AM
    cohsgrad cohsgrad Oct 19, 2014 6:00 PM Flag

    There is no comparing the Kodak bankruptcy and Alco bankruptcy. Alco is far simpler from a legal and valuation perspective. Not that I could tell you what the value of the assets are.

  • cohsgrad cohsgrad Oct 18, 2014 11:00 AM Flag

    You can't file a criminal suit. You can sue for breach of fiduciary duty and fraud.

    Doesn't mean you will succeed but they do need to answer some questions and commit to not being part of any purchase of assets from the bankrupt entity.

  • cohsgrad cohsgrad Oct 16, 2014 9:36 AM Flag

    Those guys were about the most ridiculous thing I have ever seen. Don't know how you managed to stay around.

  • Reply to

    liquidation

    by dsommerl Oct 14, 2014 2:16 PM
    cohsgrad cohsgrad Oct 15, 2014 9:14 PM Flag

    Seriously?

    There are lots of ways to make money. First there are the basics. Salaries and bonuses. No one really begrudges them this but then there are other potential compensation items that are more problematic.

    The professionals working the case and the managers are almost certainly joined at the hip. They won't rebate any fees or anything illegal like that but there is a play ball sort of aspect that probably exists. They will work together in the future and there will be plenty of free meals and sporting events to attend during the bankruptcy process.

    There will be incentive payments of some kind even if things really go in the toilet. A year of compensation seems like the minimum they will get.

    The big goal however is to take the thing private without unprofitable stores, without common shareholders and with bond holders taking a haircut. Private equity. Operate for a few years and then sell-out for hundreds of millions of dollars. This wouldn't be so bad had they came in after the bankruptcy but coming in before and then doing it seems pretty aggressive but it is conceivable. Would also be tolerable had they owned some common stock that was wiped out but my understanding is that they don't.

    Not saying there is anything inappropriate taking place. I have no way of knowing but it is conceivable.

  • These guys are pretty exposed to western Africa aren't they? Wonder if the current health crisis will impact operations.

  • cohsgrad cohsgrad Oct 15, 2014 10:50 AM Flag

    One does wonder how the buyers view it. Do you think they care? Guess it comes down to how low-maintenance the product is and whether another product can easily substitute into the network. I don't know the answer to those questions.

    I can't remember the name of the antenna maker who went belly up a couple of years ago. They had strong sales (unprofitable too) right up until the time they filed and I read about shortages after they stopped production.

    Another 30% drop and they come into fair value range for really the first time in their history as a public company. After that, who knows, maybe they can sell out but if not the long crawl to bankruptcy will probably begin.

  • Reply to

    answers, don't dodge the questions

    by justthefacts_man Oct 14, 2014 8:25 PM
    cohsgrad cohsgrad Oct 14, 2014 10:22 PM Flag

    He doesn't necessarily know what will happen but his ideal definitely wouldn't be liquidation.

    The best for the senior execs would be a recapitalization in bankruptcy that results in equity holders being wiped out, unprofitable stores closed with leases rejected and banks taking a haircut. There is the potential for the new team to make many millions of dollars here. Of course, they might just get their salaries, severance and nothing else too.

  • Reply to

    liquidation

    by dsommerl Oct 14, 2014 2:16 PM
    cohsgrad cohsgrad Oct 14, 2014 4:35 PM Flag

    A shareholders committee should probably be formed as part of the bankruptcy process to ask some of the basic conflict of interest questions and whether they were disclosed. Sometimes someone will pop up to do this sort of thing but this was a very small company and the largest shareholder is under indictment from what I understand so it is hard to see who will do it.

  • Reply to

    liquidation

    by dsommerl Oct 14, 2014 2:16 PM
    cohsgrad cohsgrad Oct 14, 2014 2:58 PM Flag

    Your key question regarding legality is important. My understanding is that if shareholders authorize an action it is very hard to argue it is unfair (oppression). Here shareholders authorized the new BOD but obviously not the bankruptcy filing.

    Perhaps there were links between the new BOD and the lenders to Alco? If there are any whatsoever it would be a problem.

    Also, what about the discussions with stockholders mentioned. If the recent sellers had information not available in the market that was provided by management they might be guilty of insider trading.

    In the end though it sure looks like Alco was put into a nose-dive during the proxy battle as the second quarter results were really bad. Third quarter is always their weakest so it was pretty much dead when they came in. May have been the move to Dallas. Still, there are questions that should be addressed

  • Reply to

    Is AMKR a screaming buy?

    by smcisaac56 Oct 11, 2014 8:06 AM
    cohsgrad cohsgrad Oct 13, 2014 6:21 PM Flag

    I'd argue that you are missing (1) the cyclic nature of the business, in other words, profits today don't equal profits tomorrow and (2) GTAT points out that supplying Apple isn't a riskless proposition.

    I think it is a reasonable buy, just not a "screaming" buy.

  • Reply to

    Wow Company Listed WAYYYY More Assets then Debts

    by expert_stock Oct 13, 2014 11:39 AM
    cohsgrad cohsgrad Oct 13, 2014 1:00 PM Flag

    The initial filings don't list debts on leases. They are in excess of $100 million based on my recollection. As the bankruptcy proceeds they will record these obligations and equity will go below zero.

    They might be able to unload the inventory at close to book value but operational costs will continue on too so losses will skyrocket even ignoring the leases that are going to kill them.

    One thing that I imagine folks will like is that severance paid to prior management team will be called back into bankruptcy estate. They will take a haircut along with the other unsecured creditors.

  • cohsgrad cohsgrad Oct 13, 2014 12:17 PM Flag

    Yea I've never understood why DRWI trades at such a high premium to what you and I think is fair. No one advocating a buy ever uses what are generally considered valid financial measures. Always silly stuff that has passed for analysis since the great internet bubble.

  • cohsgrad cohsgrad Oct 13, 2014 11:56 AM Flag

    Probably true but if they are smart (which they obviously are not) they will sell out at 70-80 cents and just be done with it.

  • Reply to

    any hope for crnt?

    by tblew Oct 13, 2014 6:53 AM
    cohsgrad cohsgrad Oct 13, 2014 10:28 AM Flag

    Now the cheapest public company in the sector despite having the strongest operational results. I'd say AVNW has a better balance sheet.

    I'd say there is hope but it is always hard to make money in a sector with so much overcapacity.

  • cohsgrad cohsgrad Oct 13, 2014 9:23 AM Flag

    A business isn't like a person. A person can always cut their expenses provided they have food and are healthy but if a business cuts expenses too far the shelves are empty and accelerates the losses.

    It happens. What is important here is making sure the managers who played such an important role in accelerating this bankruptcy filing do not benefit. They effectively paid the former CEO off in such a fashion that he suffered no loss and they are being paid very well for mounting the proxy challenge that probably accelerated the bankruptcy filing.

  • cohsgrad cohsgrad Oct 12, 2014 9:32 PM Flag

    Better than being rude.

  • Reply to

    How worried should we be?

    by justthefacts_man Oct 10, 2014 1:19 PM
    cohsgrad cohsgrad Oct 10, 2014 2:28 PM Flag

    Completely depends on ones attitude. The nice thing about this kind of situation is that you probably get more responsibility, see interesting things and maybe even get some severance (not much). If you hate that sort of thing I'd say get another job.

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