Cityscape Financial (CTYS) Message Board

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Non-Tech : Cityscape Financial (CTYS)

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To: Bosco who wrote (1104)	10/19/1997 5:10:00 PM
From: Zeev Hed	of 2544

Bosco, a small correction to your calculations, you have to add the $100 MM in debt which is now converted to equity, so, the total net assets (after conversion) would be closer to $320 MM, and that is one way to come up with potential down draft to $3/shares. You must understand however that during major down drafts stock go to severe undervaluation (remember EXSO went as low as about 1/4 of its book value). As for the floorless, they are in this business to make money for themselves, not for us. When they invest in companies having lowered ratings, they exact their pound of flesh and exact outrageous profits (which shorting against the block enable them to reap). They consider this a fair value for the risk they are taking that they will not be able to get their money back at all in case a financial accident happen to the company. You must remeber that CTYS is highly leveraged and highly hedged in its finances, and sometimes these hedges backfire (look ar Orange county's default two years ago). The floorless wants simply to be compensated for these risks. They are not "long term investors", they rent their money for short times at usurious rates. Zeev

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