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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: pcyhuang who wrote (28124)	9/18/2007 9:34:46 AM
From: Wallace Rivers	Read Replies (1) \| Respond to of 78741

Thank you for this information. I'm just curious, what price target you might have on NFI, and if you would care to share where you purchased the stock. Do you plan on acquiring more? The fact that Wachovia and Mass Financial are backers would give me, as an owner of common stock, little comfort. I don't have intimate knowledge of the financial terms of these deals, but I'd make an educated guess that both these institutions are higher on the food chain than common equity holders.

To: pcyhuang who wrote (28124)	9/19/2007 12:20:32 AM
From: Mark Marcellus	Read Replies (1) \| Respond to of 78741

The auditor has not accutually issued the "going concern" qualification. It only said that if you do such and such, then we might have to do this. Then the issue was resolved by Wachovia Bank's action. What's the basis for determining that the Wachovia action solved the going concern issues? It would appear to resolve only the "additional concern" bolded below. Deloitte references several other items as well. And, if I read the Sept 4th release correctly, Deloitte said that anything they signed off on would have to have the going concern footnote. I don't see how anyone can say with confidence that this has changed. From the 8-k: As disclosed in NovaStar's Form 10-Q for the quarter ended June 30, 2007, several conditions and events have adversely impacted the subprime mortgage industry and NovaStar's operations, liquidity and financial condition during 2007. Subsequent to the filing of that report additional events have also occurred which further impacted NovaStar's operations, liquidity and financial condition. For example, as previously disclosed, Moody's Investor Services downgraded NovaStar Mortgage, Inc.'s servicer quality rating and additional concerns have developed about NovaStar's ability to remain in compliance with certain covenants contained in its financing agreements. Further, on August 20, 2007, motions for a judgment notwithstanding the verdict and a new trial were denied in the previously disclosed California case in which NovaStar's subsidiary, NovaStar Home Mortgage, Inc., had a $46.1 million judgment entered against it. Further, due to the overall deterioration in the subprime mortgage industry and the secondary capital markets for subprime mortgage loans during 2007 NovaStar made the decision to suspend its wholesale originations and curtail its retail originations to preserve liquidity. In view of the impact to the Company of the items discussed above, Deloitte & Touche LLP, NovaStar's independent auditors ("Deloitte"), advised NovaStar in the last week of August 2007 that it was not willing to issue a consent or otherwise be associated with the rights offering unless the Company reissued its 2006 financial statements to include footnote disclosures regarding these matters. In addition, Deloitte further advised NovaStar that its reissued report on such financial statements would include an explanatory paragraph about the uncertainty of NovaStar's ability to continue as a "going concern".