Dear Growth Stock Wire Subscriber,
We have reason to believe that there is a major bankruptcy announcement, before midnight tomorrow.
Please take a few minutes to read our Founder's important analysis of the situation... about what it means for you and your money.
Good Investing,
Brian Hunt
Editor in Chief, The Growth Stock Wire
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America's Next Major Bankruptcy
(it's not GM or CitiGroup)...
Happens this FRIDAY at Midnight
By Porter Stansberry
Founder, S&A Investment Research
Dear S&A Subscriber—
This Friday, Dec. 12th, the next stage of the financial crisis will begin.
That's when one of America's biggest businesses (they
operate in 44 states), will undoubtedly declare bankruptcy.
How can I be so sure it will happen on Friday, December 12th?
Two words...
Unpayable debt.
You see, the company I'm talking about, which is the 2nd biggest in its industry, and is headquartered in Chicago, has until Friday, December 12th at midnight to pay back a $900 MILLION loan.
In the current market, this amount of debt is lethal.
The company is currently paying over $1 billion per year in interest expenses to finance their debt—that's MORE THAN THEIR OPERATING INCOME. (That's like having a mortgage payment that's bigger than your entire paycheck.)
There is absolutely no way the company can make this $900 million payment or raise this kind of money.
And there is absolutely no way they can continue as an ongoing business. The firm basically said as much, in their most recent Quarterly Report (10-Q), dated November 10th of this year.
"Our potential inability to address our 2008 or 2009 debt maturities in a satisfactory fashion raises substantial doubts as to our ability to continue as a going concern."
In finance, this "growing concern" language is the kiss of death. So what this company is really saying is they'll be forced to declare bankruptcy if they can't find the cash—and the deadline is Friday, Dec. 12th, at midnight.
I don't think there's any way they can make it.
Already, the company has eliminated its dividend, and has had to replace both its Chief Financial Officer and Chief Executive Officer, who were forced to quit after selling millions of shares.
The point is, this company is going bankrupt. Period. There's no way around it. And it's happening by the end of the day on Friday.
So what does that mean for you and me?
Well, several important things, which are potentially worth a heck of a lot of money.
You see, I conservatively estimate you can triple your money... and possibly make as much as 500% or more over the next 12 months, thanks to this bankruptcy, and the events it will spur in the ensuing months. And you don't have to touch the company that is going bankrupt on Friday.
Let me explain...
You've done business here before
As I mentioned, the company that's going bankrupt on Friday is one of the biggest and most important in the country.
I'm certain you've done business with them before.
You see, this firm (with 200 locations across the country) performs an incredibly important "behind the scenes" service for many of America's biggest and most well-known corporations, including: Apple Computer, McDonald's, Home Depot, and Wal-Mart.
What I'm talking about has nothing to do with credit cards, warehouse storage, shipping and receiving... or anything like that.
In fact, this company's assets are so important that without it, there's basically no way these well-known companies could stay afloat. So this looming bankruptcy is obviously a very big deal, not only for some of America's most well-known companies, but also for hundreds of other businesses... and thousand of employees as well.
And here's the incredible thing...
There are actually more than 30 other U.S. companies that basically do the exact same thing as this business headquartered in Chicago. And, as astounding as it may seem, roughly a dozen of these companies have actually put themselves in very similar financially precarious situations:
● JANUARY 15th: A Colorado firm in essentially the same businesses has a huge $50 million debt payment they can't afford that's due on January 15th, just over a month from now. The company owes another $200 million in June of next year.
● JANUARY 30th: An Ohio company in the exact same business has a $275 million debt payment they can't afford due on January 30th, just seven weeks from now. They have another $500 million due in 2010... and another $500 million due in 2011.
● MARCH 7th: A Georgia company in the same business has a $400 million payment they can't afford due on March 7th.
● MARCH 15th: A New York company in the same business has a $200 million payment they can't afford due March 15th.
I believe--as strongly as I have believed anything in my financial career over the last decade--that at least a half-dozen of these companies will go bankrupt over the next year.
In short, I predict the first bankruptcy will take place this Friday, December 12th, before midnight. It will start a domino effect over the next 12 months, in which we'll see plummeting share prices and bankruptcy for these highly-leveraged firms.
Remember what happened when the banking and brokerage shares started to collapse in recent months?
First Lehman Brothers went bankrupt...
Then CitiGroup plunged nearly 80%... Goldman Sachs plunged 70%... and even Bank of America dropped more than 40%.
Well, now the same thing is about to happen in an industry few Americans are even thinking about.
How do I know this collapse will happen as I expect?
Well, first, there are the debt payments that simply cannot be repaid or refinanced.
And there are two other big factors pushing these companies to bankruptcy...
Factor #1: Plummeting Prices
In essence, these companies are all in a commodities business. They all basically own and produce the exact same type of product.
The problem is, after the bankruptcy that takes place on Friday, December 12th, I can pretty much guarantee there will be a wholesale re-pricing of these products.
In other words, the price these products are fetching today will be drastically lower in just a few weeks.
The same thing happened recently to home prices...
If you own a home that you think is worth $500,000... but your neighbor loses his property to foreclosure, and the bank is forced to liquidate the house at $250,000, you can be pretty darn sure you're not going to get anywhere near the $500,000 price you were expecting, if you are forced to sell soon.
Well, the same exact thing is about to happen with these companies' products. I suspect asset prices will fall by at least 50%. In this kind of environment, these companies will be stuck between the proverbial rock and a hard place. They will be unable to raise prices. And they will be unable to raise any more money to pay their debts.
This is a complete disaster in the making.
And this brings me to the 2nd factor this entire industry is about to go bankrupt...
Factor #2: The U.S. government has set them up to fail
I know this is going to sound hard to believe, but the U.S. government is actually helping to force these companies into bankruptcy.
In short, the government has created a corporate and tax structure for these firms that makes it against the law for these companies to save money and pay off their debts.
Incredible, isn't it?
Here's what I mean...
According to legislation passed by Congress in 1960, and again in 1999, it is essentially illegal for these companies to save money. You see, in return for certain tax breaks, these companies are obligated to distribute all of their profits.
In boom times, this seems like a great deal for company executives and shareholders, who get paid large dividends...
But in a crisis like we're in the middle of right now, it is a fatal flaw that will destroy these businesses.
Just imagine if your family was in the same situation...
Imagine if it was illegal for you to have any savings. If you had a big medical bill or mortgage payment to make, you'd basically be forced into bankruptcy.
Well, it's the same for these companies...
Essentially, when they need to raise money to pay debts, they don't have any savings to fall back on. And this means they have only two options to raise capital: Issue more shares... or sell assets.
And after the first bankruptcy in this sector starts on Friday, December 12th, these two options will no longer be on the table. No one's going to want to buy shares... and the assets will be plummeting in price.
As bad as all of this sounds, however, there is a silver lining...
How to Make a Fortune
Over the Next 12 Months
The good news is, this type of purging creates once-in-a-lifetime opportunities for investors and entrepreneurs.
One thing you can do to take advantage of this situation is wait until it plays out, and buy up these companies and assets on the cheap. That's what a colleague of mine, who's generally considered one of the best investors in the world, is doing.
This guy is worth hundreds of millions of dollars, and he is setting up a "distressed" fund, to take advantage of what he calls the "asset puke" over the next 12 to 18 months.
The problem with this strategy is that it requires a lot of capital... a lot of legal wrangling... and a lot of patience.
To me, a much better way to take advantage of this situation is to capitalize on the fall of these share prices over the next few months.
Ideally we'd be able to take advantage of the Chicago company that is going bankrupt on Friday. But shorting this stock this week will likely prove to be impossible as the company's lenders attempt to hedge their exposure. Buying "put" options (to bet on the falling share price) is also likely to prove futile—there's simply not enough downside left in the shares to produce a significant gain.
But... there is a way for us to profit on the collapse of this industry. And here's how I recommend you play it.
The Domino Effect...
Remember, there are more than 30 companies across America that are in essentially the exact same business.
Well, two things are going to happen over the next few months that will allow us to make an incredible amount of money:
1) The Domino Effect: First, the companies in the exact same industry are all going to take big hits, as the details emerge about their own finances, after this Chicago company's collapse.
Remember, this is exactly what happened when homebuilder stocks started falling... and banking stocks too. First it was just one... then another... then another... and another. We've got the same opportunity here over the next few months.
2) Looming Debt Payment Dates. The other thing that will send these other companies plummeting is the looming debt dates for many of these other firms.
Remember:
● On JANUARY 15th, a Colorado firm has a huge $50 million debt payment they can't afford.
● On JANUARY 30th, an Ohio company has a $275 million debt payment they can't afford.
● On MARCH 7th, a Georgia company in the same business has a $400 million payment they can't afford.
● On MARCH 15th, a New York company has a $200 million payment they can't afford.
There are actually several dozen of these large payments due in the next two years. And we will have the chance to make money on a lot of them, as it becomes clear that these companies simply cannot afford their payments.
Here's how I recommend you play it...
Are You Up For It?
To take advantage of this opportunity, you can do one of two things.
First, beginning Friday, you can simply sell the shares of these companies "short." If you've never shorted a stock before, don't worry. It's just like buying ordinary shares, but instead of making money when the company's price goes up... you'll make money when the shares go down.
This is a good, safe way to make a lot of money in the next few months.
I expect you'll make an average of about 50% on each investment you make. And if I am wrong (which I don't believe is possible in this situation), you can cut your losses quickly, so that you will lose no more than 20%.
The better way to invest in this opportunity, however, is to buy "put options" on these companies. As you probably know, a put option gives you incredible leverage. When the stock drops by 50% or more... you make gains of up to 500%.
Of course, with leverage also comes more risk. But again, you can always cut your losses quickly... and I believe it is a small risk well worth taking... which will pay very handsomely over the next 6-12 months.
I believe you can realistically make back any money you've lost in 2008... and then some.
I also realize that you might be skeptical about this whole situation. But believe me, this is a SLAM DUNK. As I view it, there is no way these companies are not going to collapse in the coming months.
I am more sure about this than I was about the collapse of GM, which I predicted back in February of 2007. (Since then, GM's share price is down 84%.) You could have easily made 10-times your money if you had bought "put options" on GM over the past year.
And I am more sure about this situation than I was about Fannie Mae and Freddie Mac, which I predicted would collapse in June of this year. (They're both down more than 90% since then.)
● My readers have made a killing on the collapse of these companies. One reader wrote me recently to say he made 400% in just 30 days. Another wrote to say she made 129%... another wrote to say he made 300%.
● A Boston reader named Steve Caulfield wrote in to say he made $20,000... and a Ft. Lauderdale reader named Chris Landing wrote in to say he made an incredible 1,500%!
I'm even more sure about this coming collapse than I was about my predictions that Goldman Sachs, Wachovia, and Gannett newspapers would all collapse.
They all did... just as I predicted...and you could have made hundreds of percent on these moves, as some of my readers did.
In fact, I just got an e-mail today from a subscriber named Martin Tolker, who made $200,000 following my short recommendation of a company called SL Green!
But don't beat yourself up for missing these gains. They are "water under the bridge." There's nothing you can do about them now.
What you CAN do, however, is take advantage of the coming collapse that will take place in one specific sub sector of the economy, beginning Friday, December 12th.
And if you want to take advantage of this situation, here's what you should do...
An unusual opportunity. . .
I know this opportunity probably sounds a bit complex and confusing. And yes, it involves investing in companies you believe will fall in price--a strategy that typically only professionals use.
But I'm bringing this situation to your attention because right now we have the opportunity to make an absolute fortune, without much risk.
If you have losses to make up for, this is the absolute best way to do it.
I don't know that I've ever seen an easier way to make A LOT of money, beginning with just a little.
Remember, I've been beating the drum for the past few years about how Fannie and Freddie would go to zero. That General Motors was going bankrupt. That Downey Financial, Corus Bank, Capital One and Goldman Sachs were all in deep trouble and might go broke too.
They all collapsed, just as I expected. Each situation, like the one we have before us today, was a "no-brainer."
Believe me, I wouldn't tell you to consider this "shorting" strategy unless I was 100% confident it should work. I truly believe this is the single best opportunity to make a lot of money in the markets today.
In fact, the opportunity is so unusual and will prove to be so lucrative that I'm doing things I almost never do.
First, I'm publishing a separate special report on this situation, and several other ways to use "put options" in the market right now.
My report is called: Porter Stansberry's Put Strategy.
In all my years of publishing I've only set up a publication based on very specific events twice before.
Once, when I learned USEC – the monopoly uranium enrichment company – had a new pricing agreement with its Russian supplier. Though it did not double as quickly as I predicted, it did triple over the next two years.
The second time was when I figured out how to profit from the rise in the Chinese currency via Chinese stocks that were trading in the U.S. and therefore denominated in dollars. (Warren Buffett did the same thing here too, by the way). We averaged 80% gains on these four stocks in less than six months.
The point is, I only publish a special strategy report when I'm 100% confident a situation is going to work out for us.
And this time, I'm so confident that you'll make money following my Put Strategy that I'm willing to help you make a lot of money, before you have to pay the full fare for my work.
Here's what I mean...
Profit now. . . pay later
The price for my Put Strategy Report is $2,500.
Is it worth that much?
Well, assuming you put $10,000 into just four recommended positions over the next few months, you should make $20,000. And that's a very conservative estimate. I certainly expect at least a few of these positions to be homeruns, and potentially return 500% or more.
You could easily make $40,000 in one year. Doubling your money on four positions should go a long way to helping you recover whatever you might have lost this year.
So yes, this service is expensive, but the returns are well worth it.
We know that most subscribers won't bother to short any stocks during this financial crisis. And most subscribers are simply too scared right now to invest in anything.
This report is for readers who are experienced investors, and who recognize the opportunities in the market right now. This is for those of you who want to step up to the plate and get more serious about your investing, and your financial thinking.
Considering the value of the information, I think charging our standard $1,000 is just too cheap. In fact, considering the kind of stuff that's routinely sold at that price by many other publishers, and the profits my readers are making, I'd be insulted if someone offered $1,000 for this information. What I sell works. That's why I won't accept less than $2,500.
But what I am willing to do is to allow you to get started with my strategy for much, much less than that.
In short, you can pay as you go... and use your earnings to pay for this research.
Here's what I mean...
You can take full advantage of my Put Strategy Report, pay just $625 right now... and get the full details on everything I've been describing.
Then, each quarter, you'll simply make another $625 payment from your proceeds (for a total of $2,500 over the next year).
The nice thing about pricing my Report this way is that not only do you get to pay such a low upfront cost... you also get to see how this strategy is working, before you have to commit to the full fare.
If my Put Strategy Report is not working exactly as I expect, simply contact us to stop your quarterly payments. You can do this at ANY time, and your payments will stop immediately.
But I know it's going to work—that's why I'm allowing you to get started and pay-as-you-go, beginning with just $625.
Like most things in life, of
course, there is a catch. . .
First, you probably need about $10,000 in your brokerage account to be able to take advantage of this strategy. And you need to be approved to trade options.
So, before you subscribe, call your broker to make sure you're allowed to trade options. (If you do not want to trade options, or if your broker will not allow you to trade options, you can still take advantage of these opportunities by "shorting" the stocks I'll detail. Just keep in mind that the gains will not be as large as you would receive by using options.)
Then, beginning with just $625, you can begin taking advantage of the best opportunity in the markets to turn a small investment hopefully into a very large gain.
Specifically, you'll receive:
1) As soon as you sign up, you'll receive immediate access to my Put Strategy Report. My just-released report explains exactly which company and which sector will begin going bankrupt on Friday, December 12th. This report also explains exactly which investment you should make immediately to take advantage of this situation.
2) Then, each week for the next 52 weeks, I'll send you a brief update by e-mail on the stocks we're watching, and the investments I recommend you make. I'll explain exactly what to do, each step of the way. There won't be a single situation in which there's any question about what you should be doing.
There's not another analyst in America that I know of who's got a detailed plan to take advantage of this opportunity. Of course, I was also alone when I predicted the collapse of GM... and I was alone when I helped readers make as much as 1,500% on the collapse of Fannie Mae and Freddie Mac. But I don't mind being the only analyst making these recommendations. It makes the profits for my readers much bigger than if everyone else was in on the trade too.
Now, we have another opportunity at hand.
This is our new chance to take advantage of the markets.
I hope you're with me.
Click here to get started.
Good Investing,
Porter Stansberry
Founder, S&A Investment Research
P.S. I forgot to mention. I'm so sure of this situation, not
==========
Reuters
General Growth plunges on viability concerns
Wednesday November 12, 2:48 pm ET
NEW YORK (Reuters) - General Growth Properties Inc (NYSE:GGP - News) shares fell 64 percent on Tuesday after the second-largest U.S. mall owner expressed doubts it could keep operating due to looming near-term debt.
The Chicago-based retail property company has $1.13 billion in debt coming due, including $900 million in secured mortgage debt due November 28 on two of its Las Vegas shopping centers and $58 million of corporate debt on December 1, the company said in a U.S. Securities and Exchange Commission filing on Monday.
It also faces another $3.07 billion due next year, according to the SEC filing.
"In the event that we are unable to extend or refinance our debt or obtain additional capital on a timely basis and on acceptable terms, we will be required to take further steps to acquire the funds necessary to satisfy our short term cash needs, including seeking legal protection from our creditors," the real estate investment trust said in the filing.
"Our potential inability to address our 2008 or 2009 debt maturities in a satisfactory fashion raises substantial doubts as to our ability to continue as a going concern."
The company is negotiating with a bank group lead by Deutsche Bank AG (XETRA:DBKGN.DE - News) to extend the $900 billion mortgage debt on the two Las Vegas properties.
Some of the banks participating in the Las Vegas loans are involved in the company's unsecured term loan and the unsecured credit facility.
"So it's a very tangled mess," Green Street Advisors analyst Jim Sullivan said.
To raise cash, the company has put its Las Vegas malls, Fashion Show Mall, Grand Canal Shoppes and a mall in The Palazzo casino up for sale. General Growth would need to raise about $1.6 billion to pay off the upcoming maturities through April.
Depending upon the progress of a sale, the banks could extend the maturity.
"If GGP is moving forward with the sales process and the bank group believes that sales process is legitimate and will lead to a sale of those assets, then I think there's an incentive to extend the loan," Sullivan said.
But Grand Canal Shoppes and the Shoppes at The Palazzo are located in hotels owned by the Las Vegas Sands Corp (NYSE:LVS - News). Last week, the Sands' auditor raised doubts about it ability to continue as a viable company.
"That throws a real monkey wrench into things too," Sullivan said.
About $595 million of the 2009 debt maturities are from unsecured bonds issued by Rouse Cos, an owner of upscale malls that General Growth bought in 2004. Those bonds are due in March and April.
In total, the real estate investment's trust faces $22 billion of debt maturing by 2012.
Should the sales and loan negotiations fail and the company is forced to seek protection from creditors, which could include Chapter 11 bankruptcy protection, buyers may be able to get malls on the cheap because the price would be linked to satisfying lenders, not General Growth.
The winners of such as deal could be Simon Property Group Inc (NYSE:SPG - News), Westfield Group (ASX:WDC.AX - News), Vornado Realty Trust (NYSE:VNO - News), Blackstone Group LP (NYSE:BX - News) and real estate private equity player Colony Capital, Sullivan said.
"I think there's a ton of money out there that would like to own a lot of these assets at the right price," he said.
Representatives from those companies, General Growth and Deutsche Bank either did not return phone calls or declined comment.
At the end of the third-quarter, General Growth owned, managed or partly owned 200 large shopping malls and planned communities.
(Additional reporting by Helen Chernikoff, editing by Andre Grenon, Dave Zimmerman)
============
General Growth Properties WSJ comments on the company's debt negotiations with Citigroup - WSJ
- Citigroup is taking a hard line approach with GGP.
- Last week Citigroup canceled a proposed 9-month extension of GGP's payment deadline on $900M in debts by witholding its approval and demanding a concession on a different loan in return.
- Citigroup would not agree to the 9-month extension unless GGP made a change to an unrelated $2.6B unsecured term loan and credit line that the company obtained in Feb of 2006.
- According to sources, Citigroup's share of the $2.6B loan is more than $100M
- The $900M loan is backed by two of GGP's malls in Las Vegas.
- 6 other banks had agreed to the extension, making Citi the lone holdout.
- When GGP and Citi could not resolve their issues, the group of banks settled for a two-week extension.
- Now if the banks don't approve a further extension by the Dec 12 deadline, they could declare GGP in default on that debt, which could trigger cross defaults on other company debt's and force the company to seek bankruptcy protection
- Citigroup disclosed Thursday in a filing that it had bought 14.2M GGP shares (5.3% stake) and that purchase is related to an accumulation of GGP's stock by Pershing Square Capital Managment.
- Pershing reported late last month that it had acquired 20.8M GGP shares (7.5% stake) and had lined up swap contracts with Citigroup, Morgan Stanley and UBS to potentially buy more.
- Morgan Stanley earlier this week reported that it had bought a 5.1% stake in GGP.
- Other banks involved with the GGP Las Vegas loan include Eurohypo AG, Deutsche Bank, Wachovia, Bank of America and Goldman Sachs.
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