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Author: BenGrahamMan Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 402  
Subject: Re: Some BAM stuff updated Date: 9/11/2008 1:18 PM
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Randy,

I have done quite a bit of research on BAM, as have you. I have learned a great deal from you in regards to BAM and other aspects during our tenure. I am quite certain that you would internally agree that I have also learned from me in regards to BAM. My intent is not to create FUD in regards to BAM or anything else, but to share and continue to research. Present research and learn from rebuttals and look further. I have refrained from insults and such towards you. You have often insulted me and such. It appears that you have actually via your writings attempt to create FUD about me.

I have adressed what I consider (right or wrong) to be very relevant BAM issues. One such discussion which remains unanswered is the following:

BAM has total debt of $33B. On or before 2011, BAM has $14B - $18B of debt coming due.

Included in the $33B is $1.6B due March 2009 for the purchase of Multiplex. BAM claims the debt has a LTV of less than 55%. One would wonder if other entities would question that LTV. An asset bought and negotiated from say March 2007 till October 2007 may have lost a bit of value.


Further in the concept of total debt of $33b, of which at least $14B is coming due in a touch more than 3 years, whereas the company has shareholder equity of $7.2B is not just $1.6B coming due in less than 6 months but also, I do NOT consider $14B - $18B coming due on or before 2011 to be "long-term fixed-rate financing?" Much of the debt is interest only or with minor amortizations. This paragraph would encompass my discussion in my original post where I mentioned,

7. Industry credit tightness, and BAM's high leverage, could cause stress. Noting that $14 - $18B comes due on or before 2011. BAM has $33B of total debt.

It seems as though a key thesis for a BAM long has been that the BAM investor thinks BAM has availability of low cost credit and on top of that has current debt that is very manageable because of thinking the debt with BAM and subsidiaries is one of operationally long-term in nature and primarily fixed rate financing. Historically that has been the case with BAM.

It is my contention that this alleged long term fixed rate financing with ample liquidity for further leverage or refinancing is no longer as easy as it was.


It seems as though much of BAM since the early 2000's and not the Brascan of old, is based on leverage and easy credit. Well what happens if easy credit stays away for longer than a few months or years, or if excess leverage goes away permanently?

My original post in this thread addresses what I consider to be real issues.
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