Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (192263)	9/16/2002 10:00:54 PM
From: reaper	Read Replies (1) \| Respond to of 436258

this likely means that ACF was going to run into problems w/ delinquency levels on its securitizations. basically, if delinquency levels get over a certain trigger, then cash flows from those securitizations stop going to ACF. what they seem to be doing is raising the trigger delinquency level; in return they are paying more for their insurance to FSA (FSA is the entity that insures the securitizations so that ACF can sell them into the money markets). there is some other not-so-great news here. it looks like they are taking guidance down to about a buck for FY03 (June); the previous estimates were in the $4-5 per share range. they are going to lose money in the December quarter. and they are going to do a $500mm equity deal, if i read the news right; their current capitalization is only a shade over $1 billion so at current prices that is 30% dilution. further, Friedman Billings Ramsey is doing the deal; i find it odd that NONE of the major firms that do research for ACF (which include Goldman, First Boston, Bear Stearns, Lehman, Piper, and BancofAmerica Securities) are stepping up to do the deal -- that is telling. i don't know what this means for tomorrow. i would guess a big gap down but then again Metris is still trading for greater than $0 so for all i know the stock will go to $20. i can't imagine holders being happy w/ this news, though. i would make one further point, germane to our discussion of earlier today. this is just one more little bit of sub-prime credit that is being taken away at the margin -- not a good sign for the economy. NEXT!! Cheers