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