Is the amount $41M per the suit? I don't know why they think a bad loan needs to be paid back ... what kind of business is RSO in anyway?
After a preliminary hearing, a defendant can [and always do] make a request for summary judgment. That means, that even if the judge accepts the facts of the case as the plaintiff presents them without dispute, that the case still fails because the law does not provide relief. If the case progresses, to demonstrate fraud, the plaintiff has to show intent to defraud ... one of the hardest things to do in court.
If you ask me, if RSO is doing well by court time, it will be hard to demonstrate that anyone owning the stock has actually been damaged ... something the plaintiff has to show.
I really think that the re-pricing of high-yield - resulting in higher rates - is just what RSO needed. We don't have to wait for rates to go up, they already have in RSO's world. The next ER will surprise, and the one after that will be crazy.
... and that's why Morgan Stanley gave them the big money to securitize. They have $650M for this according to the press release about the Morgan deal. It may look bleak, but this could be very interesting. Added a little more today.
.... and you didn't think there was any.
The price of high-yield [HY] is going down and the yield is going up. So, HY stocks and bonds are all going down now. But, companies and funds that buy HY now will be getting significantly higher yields than they were getting before. This will increase the NII, probably increase the divies over time, and also increase the PPS over time. It just may take a few years to replace legacy loans and bonds with new ones earning the higher yields. A company like RSO does not lead money for 30 years, the duration is relatively short, so the increases will become apparent starting maybe next year, then increasing. If you can't wait then there is bitter medicine, but if you can then this is a big opportunity.
Sentiment: Strong Buy
MS and the market do not see eye-to-eye. MS put up money for RSO to do exactly what they have been doing.
"NEW YORK, NY--(Marketwired - Sep 15, 2015) - Resource Capital Corp. (NYSE: RSO) (the "Company") announced today that it has entered into a new $250 million commercial real estate term financing facility with Morgan Stanley Bank, N.A. The facility will be used to finance the continued expansion of the Company's long established core commercial real estate lending business, the origination of floating rate whole loans, on lightly transitional properties nationwide. The financing facility has an initial term of three years with one-year extension options thereafter.
Dave Bloom, the Company's Head of Real Estate, commented, "This new term financing facility with Morgan Stanley again demonstrates RSO's ability to access flexible credit to support our continued growth. RSO has a full forward pipeline of lending opportunities and the addition of this financing facility provides adequate scale and term to fuel the growth of our nationwide direct origination platform. The new credit facility brings our total capacity of term financing facilities to $650 million, which will be utilized to aggregate collateral while we prepare to access the structured finance market on a regular basis, as we have four times in the past twenty months. "
Your post doesn't say anything ... just a lot of complaining.
Look, RSO is at a 22% yield right now. How high do you think that can get? That's as high as I've seen, so maybe the divy will be cut to half of where it is now. Is there anything that you know of that would suggest that a substantial divy cut is on the way? Saying it's been cut before is pointless.
Why did Morgan Stanley put up $250M for further RSO investments? Maybe they should have called you first? Or, maybe someone wanted to make a career ending move.
Are you buying RSO now? I can't recall a yield of more than 22% and change .... AGNC way back in 2009, I think.
That implies that RSO has done something wrong which I don't think they have. They are in a perfect storm right now mostly of the market's doing. If the market wasn't wrong a lot, there wouldn't be much of a market, and it is wrong about RSO right now.