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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: Odysseus who wrote (14993)	3/15/2001 3:46:26 PM
From: Mr. Pink	Read Replies (5) \| Respond to of 18998

Perelman is a mega scumbad according to many accounts. Mr. P$nk

To: Odysseus who wrote (14993)	3/17/2001 1:51:47 PM
From: RockyBalboa	Respond to of 18998

Perelman story, dated but interesting: nytimes.com November 24, 2000 Floyd Norris: Perelman to Take Profits While Public Owners Suffer By FLOYD NORRIS RONALD O. PERELMAN has a problem. Shares of Panavision, a company he controls, have plunged. Mr. Perelman could wait it out and hope business will improve. But he has a better idea. He wants to sell his stock at a profit. Panavision, the dominant company in the business of providing cameras for the production of movies, was trading for about $27 a share after Mr. Perelman took control in 1998 through a deal that left less than 10 percent of the company in public hands. Now it trades for about $6. Mr. Perelman's proposal is for M & F Worldwide, a company in which he has a 35 percent stake, to buy Mr. Perelman's stake in Panavision at his cost, $190.3 million, or about $26 a share, "plus an appropriate premium to be negotiated." Mr. Perelman volunteered to take a mixture of cash and M & F stock. On the face of it, Panavision would not seem to be an ideal fit for M & F, which bills itself as "the world's leading manufacturer of licorice flavors." But the way Howard Gittis, Mr. Perelman's top aide, explained it in an interview, M & F's problem is that it is not growing, and so investors ignore it. Panavision is growing, but because so few shares are in public hands, it, too, is ignored. If M & F controlled Panavision, Mr. Gittis figures investors would flock to M & F. Of course, that would do nothing for Panavision's public shareholders, who would still have an illiquid stock that Mr. Gittis thinks is unattractive because so few shares are available. In arguing that Panavision is worth a lot more than the market price, Mr. Gittis noted that this summer Sony, as part of a deal to use Panavision lenses on a Sony digital movie camera, paid about $14 a share for Panavision stock. As it happens, Sony has a right to sell stock if Mr. Perelman does — unless that sale is to an affiliate. The definition of an affiliate in that agreement talks of 50 percent ownership, which Mr. Perelman does not have in M & F, but his aides say they are confident Sony will not be able to get in on the bonanza. Why not let the public shareholders get the high price? Mr. Gittis explained that to let them in on the deal would complicate the company's accounting by forcing it to put a lot of good will on its books. The public shareholders will not be consulted as to whether they agree with that logic. Panavision appears to be a classic case of a good company with a bad balance sheet. Its bonds have plunged since they were issued in 1998 and are rated at the lower end of junk. They don't require cash interest payments now, but that will change in 2002. "It's almost certain the debt will have to be restructured before the bonds go cash pay," said Mario Cibelli, an analyst at Robotti & Company, a money-management firm. Mr. Cibelli, whose clients own M & F shares, opposes Mr. Perelman's proposal. Refinancing the bond issue would be virtually impossible in the current bond market environment, Mr. Gittis said. How did the company land so deeply in debt? The bonds were issued as part of the recapitalization that enabled Mr. Perelman to take control. To the extent he manages to get cash out of his proposed arrangement, he will have cut his losses and increased his chance for a profit. To the extent he takes stock, he gets a larger stake in M & F and the profits from its businesses, which will help to cut his losses if Panavision does get into financial distress. M & F has named a board committee to consider Mr. Perelman's proposal, which has sent M&F's share price down 23 percent. It may fall more if the idea is accepted. Copyright 2000 The New York Times Company