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Non-Tech : FTL- Fruit of the Loom -- Ignore unavailable to you. Want to Upgrade?

To: Arthur Tang who wrote (117)	8/13/2001 10:51:17 AM
From: Clement	Read Replies (1) \| Respond to of 161

Arthur: Large commercial loans are treated differently than smaller ones. > Some of them may want to extend more credit to save > their loan. Yes banks often syndicate out debt, and they trade amongst themselves the debt -- and sometimes private investors (vultures) descend to pick up debt for pennies on the dollar. > Most banks will reserve the possible loss and then > collect them later. This is true, but once a company defaults, from an accounting standpoint, a reserve is created, but from an economic / managerial perspective, it is looked at differently. It is all about returns generated and any additional funds are not looked as much as debt but equity unless they are DIP funds where that particular bank does not already have a senior position. Don't get me wrong. I think that FTL is a very strong brand that will survive in some form or another. The thing that will not survive is the equity holders of the current structure. FTL will at some point be profitable but it has severe operational and financial issues at this time. It is the latter that will wipe out the equity holders. Clement