DHL Calls in the 92 Mil note from ABX

[Bitter]

Calling in the marker before they cut and run....or a regular business move...

What do you all think?

 

[shooter]

Calling in the marker before they cut and run....or a regular business move...

What do you all think?

Regular business move as a result of CHI deal. So regular it was anticipated by ABX to have financing in place when they announced they were interested in a CHI purchase. My guess is DHL hates not having control of ABX, even if the law says they can't. Books remain the same. It's the same debt they always had just who holds it changed.

 

[rotor&wing]

Calling in the marker before they cut and run....or a regular business move...

What do you all think?

Looks like the fatherland wants Joe to reconsider Astar's generous offer.

 

[shooter]

Looks like the fatherland wants Joe to reconsider Astar's generous offer.

:laugh: Now thats some funny stuff.

 

[rotor&wing]

:laugh: Now thats some funny stuff.

Gonna be interesting for sure........

 

[shooter]

Gonna be interesting for sure........

Yeah, I guess anything can happen. I just find it highly unlikely at this point in time.

 

[flyinboxes]

Well, it looks like there will be about 30 or so million in addition to the 60 or so needed or supposedly "guaranteed", wonder where that's coming from? Why in the world is Joe fighting it? They knew it might be called, they owe it, pay it. This is going to get ugly.

 

[erichartmann]

Well, it looks like there will be about 30 or so million in addition to the 60 or so needed or supposedly "guaranteed", wonder where that's coming from? Why in the world is Joe fighting it? They knew it might be called, they owe it, pay it. This is going to get ugly.

The SEC filings would seem to indicate the other $30million is in the bank.

Joe may be fighting it because his lawyers tell him he has a chance of winning. DHL may be demanding payment because, among other things, their lawyers are telling them they can win. The only ones who really win here are the lawyers. There are other, perhaps more convoluted possibilities as well.

In the end though, what has really changed? ABX may wind up owing $30 million less than it did at the start of this dance.

This may be DHL's way of attempting to put the squeeze on Joe. That $30 mil could have bought airplanes or other assets ABX wants or needs. OTH, Joe might go out and borrow the $30 mil from someone else, (bonds for example). In the end, DHL may actually have lost some ability to influence ABX.

Personally, I think this is why Joe is making the moves. With the DHL note gone, Joe is now free to buy back stock, for example. Something he couldn't do prior to paying the note. If the stock price continues to fall as a result of the uncertainty surrounding DHL's intent Joe might be able to take the company private.

Once Joe has taken the company private, what then? Reportedly one of DHL's biggest dislikes about ABX is that it is a public company. Perhaps all this in aid of allowing Joe to take the company private for both his and DHL's benefit.

What is the worst case senario? DHL pulls both the Hub services agreements and cancels most or all of ABX's flying. What does Joe do in that case? He can:

1) put the 767PC's & remaining DC-9's to DHL for the cash. Who will fly them? DHL will have to seriously cut back it's US system. Supposedly they are going to anyway, so no great loss there, except to the ABX employees who get laid off.

2) put the DC-9's to DHL, keep all of 767's. I think the 767PC's are all paid for, or most of them. He could park them in the desert, convert some to SF's, use them for parts, etc. Again, DHL would lose the lift, but again reportedly they plan to do that anyway.

3) sell ABX to Astar less the 767SF's and go on his merry way. This might be best for most of the ABX Air employees.

Remember, regardless of what ABX's stock is doing, the company is still making money. A private company is less constrained than a public one. Eventually, Joe might go public again to raise capitol. Who knows? Any way you look at it, Joe doesn't really get hurt. He still has a company to run. Only the little people stand to get hurt.

In the short term, I expect to see all the DC-9's gone, and all of Astar's leased aircraft gone. This will accomplish two things. First, it will reduce the air side of the business by the 1/3rd it is rumored DHL wishes. It will cut costs, both by the reduced flying and by the cost of the leased aircraft. It may also increase real reliability of the air system, which DHL needs.

 

[Box-Hauler]

Eric, You keep mentioning a big reduction of flying. Just because some idiot fund managers want it does not mean it will happen. If DHL pulls anymore flights they will loose the U.S. market. That is 50% of the world market according to a recent "hot line" message. Do you believe DHL is willing to risk 50% of their business to brown and purple. If this happens they will go back to the fatherland and stay for they will be defeated in the world economy.

 

[erichartmann]

Eric, You keep mentioning a big reduction of flying. Just because some idiot fund managers want it does not mean it will happen.

True. My speculation is based on the aucurrent rumor that DHL intends to reduce its air network by some 1/3rd in the near term. This, in turn, may be based on DPWN comments about "restarting" its US operation. Frankly, given the amount of freight the system now carries vs what it carried 5 years ago a reduction would not greatly surprise me.

If DHL pulls anymore flights they will loose the U.S. market. That is 50% of the world market according to a recent "hot line" message. Do you believe DHL is willing to risk 50% of their business to brown and purple. If this happens they will go back to the fatherland and stay for they will be defeated in the world economy.

At present, they haven't figured out how to make the current system work. Reducing its size and cost, getting a handle on how to make it work, then regrowing it may make some sense to them. I don't know. I personally think it might be a mistake, but they seem to suffer from NIH syndrome.

 

[flyinboxes]

It does free him up to buy back stock, that will be good, but with what money will he buy it? Who knows, I think we will all know something soon, very soon.

 

[erichartmann]

It does free him up to buy back stock, that will be good, but with what money will he buy it? Who knows, I think we will all know something soon, very soon.

OP's no doubt.