Egan-Jones gave Grant’s eight solid reasons to be bearish on Ford: “tight or negative interest coverage, a big pension-fund liability, low or negative net worth (after giving effect to the pension liability), excessive leverage, heavy reliance on securitized debt sales, long odds against a Bush administration bailout (if it should come to that), long odds against support from the Pension Benefit Guaranty Corp. William Clay Ford Jr., the 45-year-old chairman and chief executive, whose great-grandfather founded the company. Instead, he’s posing for ads on nationwide television.
Smoking in bed isn’t allowed (the practice has been known to kill people in fires). The city would like to evict homeless single adults who don’t abide by this simple code of conduct, as well as those who refuse to take part in medication plans and job-training programs.
Stealing isn’t allowed (this rule has its origin in the criminal code of the City of New York and most of the civilized world). Homeless advocates, however, are trying to block the city’s efforts to impose some order in the shelters. The Bloomberg administration’s commissioner for homeless services, Linda Gibbs, presented a far more realistic argument for enforcing the rules.
Homeless advocate Steven Banks, who is arguing against the city’s position in State Supreme Court in Manhattan, said that some of the misbehavior can be explained away as “garden-variety violations of administrative rules.” Presumably he was not referring to theft, drug-dealing and smoking in bed, but to the practice of some shelter residents of skipping social-service appointments. She noted that many “frail, elderly individuals” are risking their lives by staying on the streets because they’re afraid to enter a shelter.
Not according to Egan-Jones, a rating agency whose founder, Sean Egan, recently told Grant’s Interest Rate Observer : “If the name weren’t Ford, they would have been forced to file for bankruptcy already.” How shaky is Ford?
And Egan-Jones has been right before, as in the case of World Com. who took 400,000 shares of Goldman Sachs stock for himself when the investment bank went public in 1999.
A look at Ford’s capitalization shows the common stock trading at about -and with 1.8 billion shares outstanding, it has a market value of less than billion. It was an almost unprecedented example of corporate overreach; many shareholders were outraged, and the board of Ford formed a committee to look into the matter. Since 1999, when the stock reached a high of about , billion of the company’s value has evaporated. Ford’s extended family owns a huge block of the company’s stock.
Ford’s debt is 6 billion, comprising more than 90 percent of the company’s enterprise value. We’re starting to feel sorry for all those rich Fordies.) There is no evidence that William Clay Ford Jr. He should be paring down debt, closing plants, liquidating nonproductive assets and developing strategic alliances around the world using the strong franchise of the Ford brand.
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