Without any doubt MF Global will file for bankruptcy, here is why:

Discussion in 'Stocks' started by crgarcia, Mar 17, 2008.

  1. MF Global has an Enterprise Value (assets and securities less debts) of -$20.24 Billion, please note the minus sign.

    Even if their stock goes up 10 times, from $6.05 to $60.50, the market cap goes up from $726.39 Million, to $7.26 Billion.

    So their Enterprise Value would still be $12.98 Billion in red ink.
    A clear bankruptcy.
  2. nice
  3. Add to this, the fact that MF is based in Bermuda, not an US company.

    The Fed would prefer not bail-out a company that doesn't pay taxes in the US.

    $20 Billion is too much for banks to organize a private bailout (like LTCM), besides banks don't have excess cash to be bailing-out.

    So this leaves only the Fed as the one to bail-out. I don't think the Fed would spend $20 billion in an offshore clearing house.
  4. Then they can be absorbed by the fed. When is the US going to open a bad debt hotline? You can just send bills to the government that you dont feel like paying.
  5. The Fed is already accepting troubled mortgages as collateral for their loans.

    They are not accepting -yet- bad debt from margin calls.
  6. Where did you get this info from? As an exemployee of GNI (we are the one who created CFD's) I find it very hard to believe these numbers
  7. mokwit



    Second from top line item left hand side.

    Stock price in the market does not count for accounting solvency determination purposes. MF had USD10.8bn equity as of last reporting date.

    Balance Sheet
    Total Cash (mrq): 46.66B
    Total Cash Per Share (mrq): 388.595
    Total Debt (mrq): 24.34B
    Total Debt/Equity (mrq): 18.813
    Current Ratio (mrq): 0.992
    Book Value Per Share (mrq): 10.812

    NOW, the question is, is that USD46.66bn cash as per last reorting date still there (or is it gone?) and is it, and other assets enough to offset debt of USD24bn?
  8. What's you enterprise value. lol.

  9. The cash is already included in the calculation of the Enterprise Value.
  10. mokwit


    Yes it is but EV is still not as relevent as you think it is as explained by a poster above is. Bankruptcy (insolvency as opposed to liquidity failure) as the legal and accounting profession understands it is different to your personal understading of what bankruptcy is.
    #10     Mar 17, 2008