Quote:
Originally Posted by aquaswim47
Now a person can determine for themselves if the company is insolvent or not. Thanks for providing the information. What you don't realize is that the creditors could close on the debt at any time this company defaults on payment. They won't because the company appears to be strengthing in capacity. But a bad quarter or quarters could result in the company being brought into bankruptcy. Also, if management wants to strategically eliminate debt, it might go through chapter 11 bankruptcy to lower its debt load. That would really hurt shareholders though.
I am glad you provided the SEC information so people can judge whether this company can pay bills or not. I take the dictionary definition to mean that either the company cannot meet its obligations as they come due or liabilities exceeding assets (negative equity) as being insolvent. I feel the ability to meet obligations as they come due is specifically an issue of liquidity.
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The definition from Dictionary.com is: not solvent; unable to satisfy creditors or discharge liabilities, either
because liabilities exceed assets or because of inability to pay debts as they mature.
If the comapny can't pay it's debt, it usually has less assets than it does liabilities. But if it has less assets than it has liabilities, that doesn't mean it can't pay it's debt.
Unless there is some special provision creditors can't just demand their money back (refered to as a put feature on a bond, and this put feature is very rare). When a company is not in bankruptcy, the bond convenant holds.
In their annual report they cite the following:
"While our senior debt is currently rated investment grade by both of the major rating agencies"
"The Company’s weighted average interest rate as of December 31, 2005 was 5.96%"
Now S&P Ratings and Moody's wouldn't be rating an insolvent company investment grade, would they? S&P Ratings has it at BBB. Would ledners also give 6% financing to a company that looks as if it was going bankrupt?
Here's their debt schedule.
Contractual Obligations - Long-term debt
(all numbers in millions)
Less than 1 year $7.3
1-3 years $109.7
3-5 years $173.8
More than5 years None
Looking at the opperating income, and the options they have with the revolving credit facility, they won't have a problem at all retiring this debt.