Now money can be recovered from the D&O insurance policies on these two crooks and there might even be the ability to claw back their bonuses and stock grants which never should have taken place.
Maybe you should take a look at the proxy. They received cash bonuses of $2.5 million in the last three years and were granted stock (not options) of nearly $8 million which I know is worth less but they still have the stock. On top of that what is most offensive is that they were given additional short-term bonuses of $1.3 million just for fixing this mess they caused. All of that needs to be returned. Bonuses and incentives are for delivering shareholder value which this management team certainly didn't do. The company needs to sue these two (the payment of which is most likely to be made from their D&O insurer) for the value lost from their failure to perform their most basic functions.
Why would you think they deserve any value from options after the shareholder value they destroyed. These incompetent fools are still being paid and I can guarantee that they would not be able to receive anywhere near what they are currently being paid anywhere else after this travesty. Both the CFO and CEO received large bonuses and stock awards for the years that this accounting problem was being ignored and the company needs to claw all of those back.
The CFO job is not a difficult one with only a few basic tasks, most important of which is filing timely financial statements. His inability to do this, whatever the cause has result in the company having to post a nearly $100 million letter of credit with the DOE. The company had to turn to a group Cerberus who are are group of loan sharks to borrow the money for the L/C at an extremely high rate. This CFO and CEO should not be getting any more compensation for their poor performance and should be made to pay that interest that they caused the company to have to incur.
Q3 financials had to be delivered to the lenders today, not filed with the SEC with whom they are already late filing. We should know in the next day or two if they delivered the financials on time and if so the company will provide us with the financials and previously announced they would hold a conference call.
I'll try to explain this simply. The reason why cash is expected to be $50 million higher is that the company borrowed $100 million and then repaid $50 million of outstanding borrowings, neither of which were included in the forecast previously.
As to the long paragraph that you posted, they could have just as easily said that they used the $100 million of proceeds to add to liquidity while using cash on the balance sheet to provide the cash collateral, the money is fungible so the source doesn't matter. The company ended last quarter with $206 million, borrowed $100 million, repaid $50 million and had to use $89 million for collateral paid off $50 million of peaks loans and probably generated cash of $25-$30 million. I own some of this stock so I would like to see good results but this is not that volatile of a business that cash flow changes by $50 million in a matter of a month.
On my other point we are now worse off by the $3 million of fees needed to obtain the facility and $9 million of annual interest on it, in addition to the interest on the LOC, so good work management.
This news was not good from a shareholder's perspective. In your previous post you attributed the increased cash position to "free cash flow" which is completely wrong since the company stated the increased cash position was due to the fact that they borrowed the money. Even worse, they borrowed it from Cerberus, one of the biggest group of loan sharks around at a rate of nearly 10% and they had to pay about $3 million in fees for that opportunity. As a shareholder I am disgusted by this since we are in this position because of this terrible management group's inability to complete a basic task and file timely financial statements. I think at the upcoming shareholder meeting a proposal should be made to have management pay the increased interest expense we are going to see as a result of their screwups including the expense of the letter of credit that will have to be posted for 5 years.
But you can't have a lady running a company where actual strategy and competition is involved since no guy would ever want to take orders from a lady other than his wife at home. Yahoo CEO was just window dressing since the company is just a holding company for Alibaba stock and pepsi CEO, who could mess up selling salty snacks but this company and GM are disasters waiting to happen with ladies in charge.
In May they estimated that they would be making about $115 million of payments to the PEAKS trust over the remainder of the year and according to the 10-K there is not really any change from that figure. The timing of that $40 million may be somewhat new but anyone paying attention knew that it would be paid at some point this year.
Yes PEAKs should be mostly done by the end of the year and if they generate anywhere near the cashflow they projected at the beginning of the year, they should be on track to generating cash in 2016
There is nothing new in the 10-K and there never was an expectation for there to be since the company already reported its year end 2014 financial results. The only thing different was the presentation of the peaks loans and debt which was already known before. The real news will be tomorrow when we receive new information on Q2 and Q3. Today it was just a relief that the company finally complied with a loan covenant and appears to be on track to be back into full compliance with regulatory agencies.
For those of you who come here for answers, you aren't going to find any. We have people saying the price will go to $45 and others who say it will fall to $2. Some have positions in the stock which is the reason for their extreme posts, others are here just to get a little joy out of antagonizing shareholders or those short the shares.
The only fact we have is that the company has not issues financial statements for many months and until we find out what is in those financial statements, no other than those at the company know what the state of the business or its value is. Don't come here looking to answers because all you will get is wild speculation of some kind, many times being posted by those who claim to know something when they know nothing more than the rest of us.
In addition to the cash they have real estate worth about another $200 million. They are cash flow positive by about $100 million a year. The CEO resigning likely means they are a takeover target since unfortunately for us shareholders CEOs value their jobs over their shareholders most of the time but that obstacle is now gone. A conservatively managed company with one of the best reputations in the industry is a very attractive target in an industry that needs consolidation. Just hope that the board holds out for a fair price.
The value of the business wouldn't drop unless in the deal that was called off the company was selling the real estate for more than it was worth in which case the company would be losing out on that higher real estate value. At this point the company now owns real estate instead of cash while it would have owned more cash and less real estate if the deal had gone through so from an asset value standpoint it is in the same position.Its earnings will actually benefit since it will not be paying out nearly $10 million per year of rent on the properties.
Any business can file for bankruptcy protection regardless of the makeup of their balance sheet. Whether a judge lets that filing proceed is another thing and in the case of a highly solvent and liquid company such as this that would be the case. There is no way that equity holders would allow creditors to steal a company that has virtually no debt and $200 million of cash with another $200 million in real estate value from them. Since that is not an option being considered by the company, I would not consider it a possibility if I were you.
According to the SEC filing not all of those shares will be going back to Berkshire. It looks like only about $400 million worth of Berkshire shares will be "bought back". The rest of the deal is about $300 million cash back to Berkshire and the TV station which is valued at $364 million. Still it is nice to see the share count go down again this year.
How can someone continue to lose such large amounts of money yet till print positive returns? This guy is trying to distract from his ponzi scheme by blaming others.
I agree with your implication that Berkshire did not receive the multiple expansion that the rest of the market did and based on my estimate of a little over $134,000 for year end book we are actually a little below 1.3x book. WFC's book multiple is not really relevant to Berkshire though since it is in the insurance business so the insurance part of its business should trade closer to some blended multiple of primary insurers such as travelers (1.2x) Progressive (2.5x) Chubb (1.4x) and reinsurers such as Swiss Re (1.0x), probably around 1.3 times. While the noninsurance businesses should probably trade closer to 2x with BNSF probably worth right at 2x what it is on the books for while Marmon and Lubrzol a lot closer to book and all of the longer held businesses well over 2x book. If you blend the insurance and non-insurance I think 1.6 to 1.8 is a reasonable fair value.
I don't know the rules specifically but I don't believe Berkshire is allowed to do a buyback until it reports earnings for the quarter because I believe there is a blackout period for all public companies between the previous quarter end and the earnings report. Well this would not be a buyback but considering more the Berkshire shares that it would receive back (about $640 million worth as far as I can tell) make up more than half of the deal vale of $1.1 billion, I can't imagine Buffett is doing this deal for whatever small business it gets from GHC. Of course there are some very nice tax benefits involved since Berkshire will never pay taxes on the GHC gain now which stands at around $1.1 billion or 100x what Berkhire originally paid for the shares.
Its been all down hill since she was announced because no self respecting guy wants to take orders from a lady at work after having to at home and all the good ones will leave this company.