Yesterday McClatchy announced it had paid down a fairly big chunk of debt -- $31 million -- as part of its plan to remain on sound financial footing.
"The company noted that on April 15, 2009, it retired $31 million of unsecured notes which had matured."
Paying down debt is good, right? Well, sure, but only if you pay down debt from your assets.
In McClatchy's case, what happened is McClatchy just refinanced the debt. Blogger G.D. Gearino plowed through documents McClatchy had filed with the SEC and discovered this:
In McClatchy's case, what happened is McClatchy just refinanced the debt. Blogger G.D. Gearino plowed through documents McClatchy had filed with the SEC and discovered this:
"The Company has $31.0 million of public notes maturing in April 2009 which are expected to be refinanced on a long-term basis by drawing on the Company’s revolving credit facility and accordingly, were included in long-term debt as of December 28, 2008."
Here is Gearino's description of what McClatchy has done:
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"This is like taking out a second mortgage on your home to “retire” your first mortgage. That debt hasn’t been paid. It’s just been moved to a new spot on the balance sheet."
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8 comments:
"...expected to be refinanced..."
Maybe they were going to be refinanced but in the end they decided to just pay it off...again, just speculation on your part.
Unless you can prove/show that the $31m was just reallocated then you have nothing. Gearino is speculating that this might have happened just because of a "possible" statement.
Where is the smoking gun?
Well...the actual statement filed with the SEC results reads:
"The company noted that on April 15, 2009, it retired $31 million of unsecured notes which had matured."
If they paid off debt with other debt, and then claimed it had been retired as if out of cash, this would be a factually false and criminal statement.
So my guess is like 9:34 said they were going to refinance (when the annual report came out in January) but changed their mind and just paid it off.
This Gearino person is trying to use statements from one report to base theories on other reports 3+ months later. This is not plausible.
If they paid off debt with other debt, and then claimed it had been retired as if out of cash, this would be a factually false and criminal statement.
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False and misleading statements in SEC Filings are common place, usually hidden in legalese. It is absolutely plausible that this is what they did.
An SEC complaint will most certainly result in a clarification or amended filing upon notification.
I seriously doubt that McClatchy could withstand an SEC audit considering that their stock is now one of the 10 most manipulated structures on the NYSE.
Let me make something clear: McClatchy didn't do anything wrong. It didn't mislead anybody. It explained exactly what it planned to do in its annual SEC report (which, by the way, wasn't filed three-plus months ago, but in early March). The unsecured notes were "retired" in the sense that the bondholders were paid off, in full and on time. It's just that McClatchy dipped into its bank credit line to do so.
The burden to prove/show what happened with that money is on McClatchy, not me. That's what SEC filings are for ... to account for the movement of money. If McClatchy did something different from what it said it would do, that should have been mentioned in this week's SEC filing. I went through it several times, and found no mention that its plan for the bonds had changed. (And if it had changed, McClatchy is supposed to say so.)
All the documents are public. Feel free to dive in yourself and tell me what you see. All the pertinent information is there. I'm not infallible. But I'm pretty sure I'm right.
Oh cut the poor MNI lying bastards some slack. I'm sure one of their idiot columnists must have advised the public to do the same with their mortgages, so their only following their own sage advice.
Albeit lying through their teeth about it, like all the illegals they must have "advised” via their unbiased paper, but following their own advice nevertheless.
I see it, in nautical terms of course. Picture the Titanic with tiller boy at the helm telling the mere passengers, for their own good of course, what’s best for them.
"This is like taking out a second mortgage on your home to “retire” your first mortgage. That debt hasn’t been paid. It’s just been moved to a new spot on the balance sheet."
Oh, in time, it’ll all come out in the wash. But in a Titanic context breach of the hull thingy
It has already been made clear that the media’s financial writers were caught with their pants down, instead of recognizing the signs leading to the present economy. I don’t trust them to follow up on the MNI manipulation of funds. After all, they still work within a corrupt profession. Our only hope is the better financial blogs.
I know what we need to do. Start a rumor that Gary Pruitt is playing games with the SEC report. Then, send out a few dumpster divers to see what he is eating for lunch. Then, send out phony news stories to the AP and all the little berg papers echoing the rumor. Then, bring in Katie for some TV network coverage. Then, send some kind of a signal up Chris Matthews’ leg. Then, demand Pruitt answer these rumors. This is a brilliant plan, how did I think of this by myself?
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