The news is out. S&P rated REXI notes B minus. Stable.
1. There is no accounting irregularities. Some how Off Wall Street
got this leaked from S&P rating and created this frenzy short.
2. The short wins the battle for the last 5 days, brought
REXI down 50%. Now the short must pay its price. Cover it.
Instead of "buy the rumor, sell the news" , now is time to
"short the rumor, cover the news".
3. Also, SEC needs to investigate why OWS got this info from
S&P rating. That explains why they keep holding to their
short and waiting for the release from S&P, I guess.
4. REXI business is: "buy non-conforming loans at a discount,
repackage its terms and rates for a profit". So non-conforming
here must be rated B minus already, I guess. If the loans is
conforming, it would be rated A. Right ?
5. 50% off from last 5 days, it's a bargain now.
6. The 12% notes will be due in 2004.
Wednesday August 26, 4:43 pm Eastern Time
Company Press Release
SOURCE: Standard & Poor's CreditWire
S&P Rates Resource America $115
Million Senior Unsecured Notes 'B-'
NEW YORK, Aug. 26 /PRNewswire/ -- Standard & Poor's today assigned its single-'B'-minus
long-term counterparty credit rating to Resource America Inc. [Nasdaq:REXI - news] and its
single-'B'-minus rating to the company's $115 million 12% senior unsecured notes due 2004.
The ratings are based on the concentration risk of the company's primary assets, commercial
mortgages, and the transactional nature of this business. The firm's primary assets are distressed and
nonconforming commercial mortgages, which Resource America renegotiated and are now
performing loans. Resource America renegotiates the terms of these loans with borrowers to
construct agreements that reflect the current economics of the underlying collateral. These
mortgages are highly concentrated, both geographically and as to size of the individual loans. The
size of the individual loans has been growing as well, increasing the risk of the portfolio overall.
Continued profitability depends on the company's ability to locate distressed and nonconforming
commercial mortgage loans for sale and then successfully renegotiate the loans. Other key assets
include leases on office equipment to small businesses, and oil and gas partnerships, which are
subject to volatile commodity prices. The office equipment leasing business is in a very competitive
sector of this industry, although Resource America adds value through strong customer service.
These concerns are mollified by Resource America's adequate, risk-adjusted capital and systems
infrastructure. Capital, as measured by the debt to equity ratio, was 0.59 times at June 30, 1998,
reasonable to support these risky assets. Resource America's systems infrastructure is adequate to
administer its office equipment leasing business at its current rate of growth.
OUTLOOK: STABLE
The outlook is stable with the proviso that Resource America is vulnerable to numerous risk factors.
These factors include the economy in the Philadelphia region, the company's ability to compete
against much larger companies in the office equipment leasing business, and volatile oil and gas
prices, Standard & Poor's said. -- CreditWire
SOURCE: Standard & Poor's CreditWire |
