Sunday, June 22, 2008

Steve and Barry's and what the #$%@#% is GE doing

Only a few days ago I expressed complete puzzlemement over a $125 million dollar loan that GE had made to Kinney Drugs. Here is my post - and here is the GE press release.

This was not a one-off. In March this year GE provided almost $200 million to Steve and Barry's.

That loan is already rumoured to be default - and Mish - bless him - has pointed out just how much of a Ponzi scheme Steve and Barry's turns out to be.

Mish concludes by saying:
If it seems like GE trades like a finance company, it's because GE is a finance company (masquerading as a conglomerate).
In this case Mish is probably right. The two press releases (Kinney Drugs, Steve and Barry's) have the same contacts:

Jeff Wilson
+1 203 229 1887
Jeffrey.Wilson@ge.com

Ned Reynolds
+1 203 229 5717
+1 203 837 0699(mobile)
ned.reynolds@ge.com
You got to wonder about an asset backed (which I think means stock backed) loan for $200 million which goes bad in four months.

The first question for Messers Wilson and Reynolds is what GE is going to do with $200 million of cheap apparel.

The second question: why does this business continue to exist - and who gets fired?

Mish's general assertion however - that GE is a finance company masquerading as a conglomerate is wrong. They can turn Italian crap into electricity - and no finance company can do that.

They might have a worse time though turning Steve and Barry's old rags into cash.

John

1 comment:

Anonymous said...

The Kinney Drug said Asset-Based, not sure if you were confusing asset-backed with asset-based.

If so - asset-based for Steve & Barry's was secured by inventory assets to the best of my knowledge.

The inventory is given an "Equity Bid" appraisal by someone like Great American. Great American would buy the inventory upfront and payout GE and personally liquidate it - taking the risk on themselves.

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