tag:blogger.com,1999:blog-726517614184169426.post1384650790960671828..comments2023-08-23T04:15:41.751-05:00Comments on The Jaded Consumer: ACAS' Share-and-Cash DividendJaded Consumerhttp://www.blogger.com/profile/04631410690179296528noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-726517614184169426.post-91240827733078152732009-08-06T17:42:02.815-05:002009-08-06T17:42:02.815-05:00A large part of the NOI drop was due to a reversal...A large part of the NOI drop was due to a reversal of PIK income previously accrued. One of the analysts on the call tried to probe into it further, and I'm not sure if he ever got a response.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-726517614184169426.post-32665027715438684252009-08-06T01:21:42.074-05:002009-08-06T01:21:42.074-05:00i posted the interest coverage comment above....
...i posted the interest coverage comment above....<br /><br />acas has no chips to bargain with at this point. lip service on bond yield analysis doesn't suffice. credit quality has proven to be terrible. results on a go-forward are required.<br /><br />middle market buyers understand this. self-induced forced liquidation is emminent. forced is a loose term, but we all understand that the remaining 1.9 billion of equity is not much cushion and bumps up in the future will be meaningless.<br /><br />the academic/ accounting exercise of determing bond-yield analsis is no longer fun. its great coffee table banter for the BDC industry, but acas has proven they can't pick winners that pay back principal. 20% non-performing loans at cost is deadly. frnakly, its embarrasing. further, only +/- 1/3 of their portfolio has senior security, not indicating an enviable position.<br /><br />acas "franchise value" = 0. banks are in driver seat now. expect a resolution to = "voluntarily forced" liquidation.<br /><br />if i had a $20MM piece of the +$2 billion unsecured, i would only accepte a hyper-amortization on a secured basis and no relief on the rate. i would require a risk-premium in excess of the inherent troubles in the market.<br /><br />NOI on a go-forward will be dismal. new investments will be non-existant.<br /><br />acas will ultimately be a case study in financing long-term assets with short-term debt, while accepting mark-to-market valuation requirements. looking back, a recipe for disaster. <br /><br />i cringe that i let myself buy into the idea that value remained when most of their deals are leftovers from the 2006-2007 vintage.<br /><br />Closing comment: stock value should be based on "realizable value" that is based on an accelerated liquidation value, not from an "orderly liquidation" aproach.<br /><br />if they owed me +$2 billion and i was supported by less than $2 billion of equity, i dont care about interest coverage, i care about my principal.<br /><br />i am long my upcoming dividend, but not my principal. sold out my principal and will ride out my divy. my basis was $4, so i am lucky. but ive been tracking them for years. private equity is a great space to play in, but mimatched leverage durations ultimately kill the fun - for all stakeholders.<br /><br />Good luck to all of us. at this point, an agreement w the lenders isn't really a plus, itll prove the inevitable....a garage sale.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-726517614184169426.post-1771598228513548692009-08-05T19:24:10.967-05:002009-08-05T19:24:10.967-05:00Just a thought on the call..
2.3:1 debt to equity....Just a thought on the call..<br />2.3:1 debt to equity... ouch, really blew up this quarter.<br /><br />The bond is trading near 70 (as compared to the sub 40 it was), so that is a positive sign.Imperatornoreply@blogger.comtag:blogger.com,1999:blog-726517614184169426.post-26644102327509976702009-08-05T08:40:47.976-05:002009-08-05T08:40:47.976-05:00I need to listen to the presentation (sadly, I hav...I need to listen to the presentation (sadly, I have to work and can't blog professionally!) to frame the numbers, but my first impression is that NOI's collapse to $0.09 is miserable. Last year, I explained how ACAS could earn $0.04 per quarter in just returns from AGNC -- and that was before the quarterly dividend was $1.50. I'm interested to hear how NOI got to this place, and whether it reflects weird things or just worsening business all around.<br /><br />I would point out that ACAS' power to handle its debt problems isn't limited to its interest coverage: ACAS has been selling assets for cash, and can pay down debt (particularly the debt that's maturing soon).<br /><br />ACAS' pink-slipping of over 40% of its workforce is an interesting statistic. If it's the folks who were doing the deals that haven't panned out, maybe the response should be "good riddance" -- but keeping good people for due diligence and oversight of investments is critical to ACAS' success going forward.<br /><br />I will have to have a look at this over the weekend, to see what it looks like under a magnifying glass. Post-dividend NAV >$7 seems good, in light of ACAS' apparent ability to realize NAV or better on sales. NOI drop is not reassuring, though.Jaded Consumerhttps://www.blogger.com/profile/04631410690179296528noreply@blogger.comtag:blogger.com,1999:blog-726517614184169426.post-83813398293449216972009-08-05T00:29:29.712-05:002009-08-05T00:29:29.712-05:00The Interest Coverage of 1.2x is the most alarming...The Interest Coverage of 1.2x is the most alarming statistic of the whole presentation.<br /><br />ACAS has just lost the only leverage they had with their lenders; pun intended.<br /><br />It's now extreme survival mode. I remain long, but only because I have pot odds, not because of the hand I've been dealt.Anonymousnoreply@blogger.com