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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: orkrious who wrote (192880)	9/19/2002 9:02:36 PM
From: Freedom Fighter	Read Replies (3) of 436258

>Meanwhile, cash flows will dwindle, especially if AmeriCredit extends even more loans than they are to avoid hitting delinquency triggers. < Aren't the delinquency triggers related to the individual trusts? In other words, if they do another securitization I thought the new trust has no bearing on the triggers of the troubled ones. I do not believe they can avoid any triggers simply by doing more securitizations. A new securitization might tend to make the overall numbers for the company look better because a fresh batch of securitized loans would perform well for awhile at least. But I suspect that is unrelated to triggers. No? My point being, it is my understanding (which is somewhat limited I might add) that if ACF simply slows growth a lot, cash flow improves automatically (assuming steady credit losses - not a certain assumption in this case of course). I believe the cash flow/liquidity issue is based on 3 things. 1. There isn't enough cash flow to support the current growth rate. New securitizations require upfront deposits. Those are typically funded via new debt - which is less available in this environment. Slow the growth rate, they slow the deposit requirements and automatically improve liquidity as other trusts continue to pay. (again all else being equal) 2. The rating agencies want them to deleverage in this environment. 3. The new proposed business model will require LARGER upfront deposits (even more cash to start it off). Of course the upside to that is that the trust will start paying back almost immediately instead of ACF having to wait for a long period of time while reserve cash builds up inside the trust. Long term this would align EPS with cash flow and allow the business to function a lot better. In the end, I think ACF WILL raise some cash to convert the model and also slow the growth rate. It will be up to the credit quality. NO disaster and this is a very undervalued stock - else ZERO is possible. Real strong opinion don't you think? :-)

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