Hi, thomasj
First, it has a German majority holder VEBA AG of Dusseldorf.
As VEBA earnings are not that strong this year, it is possible that WFR is pushed up to prevent VEBA AG, through it subsidiary, to do the necessary allowance for their holdings. That happens very often in companies residing in countries with continental-europe bookkeeping.
Nothing could be found about a possible sale of WFR, althought already mentioned earlier.
And as other opportunities, a possible sale would happen at decent prices.
A bit disturbing is the high book value of $12, of which one can subtract running losses.
The company pays huge amounts of employee bonuses for simply staying with the co., according to the Q. Very strange. Half of th bonuses will become due in 1999.
See: biz.yahoo.com about fresHG MONEY FOR WFR
The financial condition is dire: Negative working capital, heavy borrowing, see the credit level approaching $800M.
A rarely seen negative cash outlook by the management found in recent 10k (13-8-98):
"Management currently believes that cash generated from operations, together with the liquidity provided by existing cash balances and credit facilities will be insufficient to satisfy commitments for capital expenditures and other cash requirements for the next twelve months.
Accordingly, the Company is discussing with its principal stockholder and related affiliates additional financing and the restructuring of existing credit facilities. Although there can be no assurance, management believes it can obtain sufficient financing to meet its cash requirements for the next 12 months.
Conclusio: WFR has a small loss if you exempt the onetime charges. Loss will be a bit wider due to higher interest rates paid to veba and some forward bonuses when there is no reserve for it.
Technically recovering from an oversold state into normal charting area.
Outlook: poor, but I would recommend a slow short ladder as VEBA window dressing activity is hard to estimate. I won't expect a takover surprise. But it could run to lower two digits (12?) for a very short time if the entire market is not too bad.
Question is whether you consider it as fundamental, longer kept short or for a quick few buck down (I do that often when I earn a few bucks straight out).
Thank you for heads up
C.
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