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Non-Tech : Cityscape Financial (CTYS)
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To: Zeev Hed who wrote (2453)5/24/1998 5:49:00 PM
From: CoffeePot  Read Replies (2) of 2544
 
Hi Zeev, I've been monitoring this thread for awhile and to say the least it's been interesting. Though I must say I have been quite perplexed by the emphasis on the convertible debt and lack of attention to Cityscape's underlying fundamentals--the growth and health of their loan portfolio. I may not have my numbers right but if I remember correctly 50mm of convertible debt isn't going to determine whether a company with $3billion+ in assets is going to sink or swim. Even if CTYS had $0 convertible debt outstanding it's likely the stock price would have followed the same path.

That said, from looking at CTYS's U.S. loan portfolio appears they should be in fair shape. If I remember correctly the default rate on their U.S. originated loans is around 3-4% compared to 17-18% for their old UK operations. I'm not sure at what point the default rate becomes dangerous but 3-4% seems to be about equal with other firms in the industry. What really seems to be hurting them now is their high borrowing costs. I'm not sure if they've been able to float anymore bonds but if I recall correctly their last one carried a 11% interest rate (which in and of itself scared off some observant investors, I think we were at around $8-9 at the time) which is obviousely way way higher than their peers. I feel if CTYS can renegotiate their debt and bring their cost of borrowing down to a reasonable level this could be a very viable operation.
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