Interestingdeals
An interesting article on the legal feud between hedge funds TCI and 3G Capital and rail operator CSX. It’s a good reminder for us to mention that The Deal Professor column at NY Times’ Dealbook is mandatory reading. There’s much more to “risk” than greek letters, and one aspect of risk is knowing precisely what one is getting into – in this case all possible legal ramifications of a given stake.
MySpace killed Friendster only to be gobbled up by Facebook. Six years after NewsCorp bought MySpace for US$ 580 million it’s now sold for US$ 35 million. Google just launched its own “Facebook-killer” yesterday. There is absolutely no evidence yet whether Google Plus or any other competitor or substitute will bother Facebook. There is even less evidence about what’s “in the prices” – what prices? what metrics? what predictability of future cash flows? – so Social Media buyer beware.
Interesting way to improve funding costs, while also pleasing the banks involved. Oi, the Brazilian telecom giant, also happens to own a lot of real estate – for instance the spots in which they have antennas. It’s transferring 263 properties to an SPC, for which Oi will pay rent. At the same time the SPC raises money to pay for the property by selling these rent receivables as CRIs, the portuguese acronym for “certificates of real-estate receivables”. The flip side for banks is that they get to invest their savings accounts regulatory requirements in a “better-quality” CRI. For Oi, through the cost of this debt and the tax benefit of paying rent, they get to secure a lower cost of funding than that achieved in their recent (May ’10) bonds issue.
There is an increasing amount of BRK shares sold short and people seem quick enough to point to the Burlington deal as the culprit, for many reasons (listed inside). They may be missing the number one reason, and it’s one that merits attention.
