Monday, July 23, 2007

Expedia cuts planned buy-back size due to lack of financing

I´m shocked.... :-)

Looks like overnight nobody wants to finance a multi billion $ buyback with junk debt...... S&P cuts Expedia's rating to junk

Harte Zeiten für (junk) schuldenfinanzierte Aktienrückkäufe...... :-)
Expedia, Inc announced today that it is amending its tender offer to purchase shares of the Company's common stock to reduce the maximum number of shares that the Company is offering to purchase to 25,000,000 shares, due to the lack of available financing, on terms satisfactory to the Company, as a result of current conditions in the credit markets

Bloomberg
Expedia Inc., the Internet travel agency run by Barry Diller, slashed the number of shares it plans to buy back by 79 percent because it can't get enough financing with acceptable terms.

Its original plan called for buying back as many as 116.7 million shares, or 42 percent of common stock

The company's debt would have climbed to $4.07 billion from $500 million if it repurchased all 116.7 million shares at the maximum proposed price of $30 each, according to a regulatory filing June 29.

Expedia spent $660 million buying back 30 million shares in January.
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4 Comments:

Blogger Edgar said...

A lot of these corporate scamsters are letting their mouths write checks their a$$ can't cash.

3:08 PM  
Anonymous Anonymous said...

Borrowing money for a buyback seems an odd idea anyway. If you compared the benefit of that to shareholders vs a one time dividend payment (zB), I wonder what it would show.

As I recall, HD also announced its intention to do the same, and its stock has shown weakness recently, perhaps for the same reason.

eh

12:37 AM  
Blogger jmf said...

Moin,

i think that lots of companies that have announced buybacks will quietly back off....

The problem with Expedia was that they announced a tender offer so they were under pressure or as we call it "Zugzwang".

In general it would be a great idea to short leveraged companies ang go long the companies with a rock solid balance sheet..... Time for a new index :-)

If Home Depot makes the move and waste their money with the buyback i will short them and hedge the position with one of the more solid players in europe...

1:51 AM  
Blogger jmf said...

Stock is still 8% higher compared with the buy back announcement

3:06 AM  

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