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Textron Taking Advantage Of Goldman Conviction Buy Generosity, Issues $600 Million In Bonds
It seems just yesterday that Textron was getting some love from Goldman Sachs. It took less than two weeks for the company to turn around and reciprocate the favor, by issuing $600 million in new notes, on new and improved sentiment for pent up private jet demand courtesy of Goldman, and allotting the 85 Broad Street based hedge fund a juicy place in the ranks of Joint book runners.
But luckily, Goldman expressely highlighted this upcoming conflict of interest at the time when it upgraded the company:
Goldman
Sachs expects to receive or intends to seek compensation for investment
banking services in the next 3 months: Textron Inc. ($15.50)
Another potential conflict to be aware of: looking at the Uses of Funds, one uncovers the following: "We plan to use the net proceeds from the issuance of the notes for general corporate purposes, which may include the repayment or repurchase of certain of our debt."
And just who are the Lead Arrangers and Joint Bookrunners as disclosed on Textron's most recent $750 Million Credit Agreement from October 26, 2007: why Citi, Bank of America and, you guessed it, Goldman Sachs (each responsible for $250 million of the total amount). And what were the particular uses of that specific Credit Agreement you may ask. It appears the funds raised were simply meant to buyback stock. Time for another reminder: whose prop desk is a big holder of TXT stock? Time to take a look at the Goldman conflicts disclosure one more time:
Goldman
Sachs beneficially owned 1% or more of common equity (excluding
positions managed by affiliates and business units not required to be
aggregated under US securities law) as of the second most recent month
end: Textron Inc. ($15.50)
But at least President Obama is asking Wall Street bankers to look deep inside and find their conscience, so as not to repeat the mistakes of the past in the absence of any form of credible regulation. With such actions, Goldman is clearly on its way to finding its inner beauty.
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OHMYGOD... I'M SHOCKED BEYOND DISBELIEF!!!
Uh... no i'm not.
Every trick in the book is on the table, and probably some not even in the book.
Free markets are dead, long live government markets. After all they should be a hell of lot easier to trade. They only ever go up.
Unabated crime = US economy
Glad you caught that and posted. Same crap happening with junk across the board in the market now. Obviously these repurchases will not be done in the open market.
How can the garbage keep flying to the moon like it's 2007? This is how.
There will come a time when Ponzi Scheme paper games like this (by the likes of Goldman Sachs) of passing bad paper onto newer hands, will self destruct. The public (like ZH) needs to continue to expose these overt schemes. By the way, and this is not very public (yet), but the Fed and Treasury is "currently" conducting another round of second "stress tests" on the top tier TARP banks and institutions. Word has it, the preliminary results are not good.
Yes, the "retest" was a rumored reason for the put action in WFC lately, among others. It's time to really gun the testes in advance of the required new capital raises. Lots of talk that it will be heavy "this time around." Across the pond, too.
It can't end though because what's the alternative, back to barter? I figure that's a world none of us want to see. What will happen is the US dollar will be devalued and people will be paid back in increasingly worth less (not worthless) dollars. What seems to be lost though, is that a devalued dollar will also mean a devalued or lower standard of living for US citizens. The UK has been through all this, we used to own a quarter of the world and was the largest empire ever. Over time economic power will shift to the east and so it looks like China and perhaps India will be dominate forces in the future.
The Fed has over $4 trillion of UST and we won't be paying them interest either. This whole equity ramp was designed to raise capital for bailouts, nothing more except maybe a little "wealth effect" for the real economy. The banks were leveraged 15-30 times! We are talking $15-30 trillion of money that has gone "poof". Resume bear market rally...
I'd love to be able to track the fiduciary guys who are buying this crap.
Let's not forget another TXT joint-book runner, Barclays. They are on top of their game too. So don't be giving Goldman all the props because the analysts over at Barclays gave TXT a nice little UPGRADE too -- Overweight -- last Friday.
Look who made the list today of 'most likely to go bankrupt'
http://www.reuters.com/article/pressRelease/idUS114031+16-Sep-2009+BW200...
Thanks for the heads up.
NOT AMD. Would be good to see at least 2/3rds of them go out but NOT AMD.
So who will buy these bonds?
Eventually they'll make there way onto the taxpayers balance sheet. The first round is just a money transfer from pension funds to Goldman.
I look at it this way. Many pension funds are insolvent. If stocks go up, there's less of a gap that federal gov't will have to eventually fill.
Excellent reporting TD....a perfect example of how to let them know they are being watched.