"AMR Fights to Quell Bankruptcy Fears"

[Jonny Sacko]

I hear you about the paper, but is it loss if they never sell? Or does it come due, and they must contend with it?

 

[Andy]

I can't talk to you anymore, you used BK.

Dang, no smiley face?
Would you prefer Ch. 11?

 

[Andy]

I hear you about the paper, but is it loss if they never sell? Or does it come due, and they must contend with it?

The paper's not a loss. It's backed by student loans. CAL will probably try to roll it over at a later date, once the ARS market gets unlocked (Hopefully! - too bad the Fed's dorking this up with a wide open discount window).
If unable to roll it over, they'll have to wait until those student loans start getting paid back.

As more and more of these ARS auctions fail, it will become harder to use this paper as a short term cash equivalent. This will have a huge impact on cash intensive businesses.

For those that are looking for info on what I'm talking about, refer to this press release: http://biz.yahoo.com/prnews/080401/latu178.html?.v=20

Specifically:
Continental ended the first quarter of 2008 with unrestricted cash and short-term investments balance of $2.51 billion. This balance excludes $237 million in par value of student loan-related auction rate securities that were previously classified as short-term investments on our consolidated balance sheets. These securities were reclassified as long-term investments during the quarter.

 

[Jonny Sacko]

Thanks