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

To: chester lee who wrote (4677)	11/18/1998 8:14:00 PM
From: gringodoc	Read Replies (1) \| Respond to of 18998

Chester: With today's news, I wonder how the board of directors will justify a dividend next quarter and, if they do, how they will finance it. Also please comment on this paragraph from the Bloomberg piece below: IndyMac shares fell 3/8 to 9 15/16. The stock declined 46 percent last month, impairing the company's ability to raise capital through its dividend reinvestment plan, IndyMac said. It is surprising to me that their DRIP would be a significant source of capital. How much dilution has this caused? This suggests to me that investors have cancelled their DRIPS; otherwise the same amt of dividend would have been reinvested but with issuance of ~46% more shares. '''''''''''''''''''''''''''''''' Indymac Expects 4th-Qtr Loss, to Fire 19% of Staff Pasadena, California, Nov. 18 (Bloomberg) -- IndyMac Mortgage Holdings Inc. said it expects a fourth-quarter loss and will fire 19 percent of its staff after being hurt by declines in the mortgage-backed securities market. Pasadena, California-based IndyMac, a real estate investment trust that provides mortgage financing for builders and developers and home improvement loans, said it will fire 280 people by year's end to cut costs. Although it doesn't know the size of its fourth-quarter loss, its first, the company said it expects to be profitable for the year. Real estate and mortgage lenders, such as IndyMac, have seen the value of their securities drop and their funding sources evaporate as investors shunned all but the safest investments, like U.S. Treasuries, after Russia's default in August. IndyMac sold mortgage-related assets in the past few weeks to raise money, reduce debt and cut borrowing. As a result, assets have declined by about $700 million to $6.7 billion since Sept. 30, when assets totaled $7.4 billion. It said it expects the value of its assets to decline by another $1.0 billion to $1.5 billion by the end of the fourth quarter. ''The well-publicized flight to quality created a simultaneous and severe disruption in IndyMac's access to borrowings in the repurchase market, liquidity and market valuations of mortgage securities and availability of equity capital,'' President Michael W. Perry said. The company said its cost-cutting measures will reduce fourth-quarter expenses by 25 percent from the third quarter. IndyMac shares fell 3/8 to 9 15/16. The stock declined 46 percent last month, impairing the company's ability to raise capital through its dividend reinvestment plan, IndyMac said. The company said some of its lenders have restricted the amount and terms of certain borrowings and imposed margin calls on assets that secure its borrowings, moves which hurt the company's ability to fund its business. IndyMac said its book value as of Sept. 30 was $12.41 a share. As a result of recent asset sales, the REIT said its debt- to-equity ratio has fallen to 6.2 to 1 from 6.9 to 1. It expects the ratio will decline below 5-to-1 by quarter's end. 17:00:53 11/18/1998