I wouldn't say that if GT was written off for a complete loss that this would be worth alot.
Much depends on if they can find a buyer and get a decent price.
From the s&p downgrade article at yahoo biz.yahoo.com
"The resultant market turmoil has caused uncertainty concerning the level of proceeds Conseco will be able to realize from the sale of Conseco Finance(green tree), or even whether a sale can be successfully executed, as well as Conseco's current financial flexibility."
This is not a good sign when Standard & Poor's has doubts.
The present shareholder equity is based on that unit being worth $6 billion. Shareholder equity is,from the last 10k is about $5 billion($14 a share). The sale price will have a great effect on that. Sell it for $3.5 billion and equity is cut in half. Share holder equity would be about $7 a share. Even if they get the asking price (doubtful) shareholder equity would be about $9 a share.
Add in the $500 million in loans to company officers starnews.com
that were backed by CNC and are only worth $200 million now. add the likely credit rating cuts and we can see how this got to $7.
Can this go lower? Time will tell. It may bounce, it may go lower. It has been going down on increasingly higher volume.
It is reminicient to me of FirstPlus financial which was the darling of Wall street with 125% loans a couple of years ago. The share price was $60 and the company was flying high until the money situation dried up because of the Russian situation. Nothing illegal happened and they weren't cooking the books, but they suddenly found their liquidity gone. The price dropped and people thought it was a deal. It went to $30,$20,$10,$5,$1 with people saying what a deal. Early last year, they filed for chapter 11 in two of their 4 or 5 subsidaries, to protect themselves while they reorganized. There book value at the time was $12, quote.ragingbull.com They stopped filing SEC reports during the proceeding and were delisted from the NYSE and now trade as FPFX. The share price dropped to under $.10 a share.
The company is still doing business and has even reported a profit and paid down a lot of debt during the bankrupcy proceedings as reported on the Raging Bull thread by some very dilligent posters that have kept up with the court documents. It has been reported that the Judge and creditors have ok'd the bankrupcy plan last Friday April 7th although there hasn't been a News report yet. The shares were selling at $.54 Friday.
Estimates from the thread are that they will still be carrying a $7 book value after selling part of there loan portfolio to Countrywide finance to pay off creditors(a done deal)
But after two years they are still going through the proceedures. They have emerged from bankrupcy, but they will have to file to the SEC, which probably won't take long as everything has been scrutinized by the BK proceedings, they will have to be relisted on a good exchange, if their share price after they emerge and the SEC filings warrant it.
Two wasted years for investors, most who thought it couldn't go lower, some who bought in the upper teens and above who will have to wait years to recoup if ever!
Dave |
