Bluegreen to raise 100M

[VA_Traveller Senior Member Find all posts View Profile Close VA_Traveller]

Bluegreen seeks to raise $100M

Bluegreen seeks to raise $100M - South Florida Business Journal:

Thoughts?

[mrspigdoc Member Find all posts View Profile Close mrspigdoc]

Is this a good sign?
Teresa

[vintner Super Moderator Find all posts View Profile Close vintner]

Well...I think it is good as BG is continuing to work to keep operating, provide good units and try to just keep functioning in these times.

Some may think...'not good, they have to sell additional stock just to keep their head above water. I would stay away from them.'

I think their stock price will drop as there will be more supply, and that may be a buying opportunity for a longer term, but I am not worried about BG and their near outlook.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

I saw this last week and was a bit surprised by it. The time to have a public offering would have been when the stock price was over $10/share. That they are doing it now either signals that they have a cash problem or they are looking to acquire some distressed assets or maybe they are just planning on financing their customer purchases.

The main issue they could be having is financing for its customer sales. Sales were over $400-500M in 2008. I think they had credit lines of something over $100M. Perhaps they need more $$$ to finance customers.

Today, Bluegreen's stock is at $3/share with a market cap of about $100M. If they raise $100M, this will dilute current shareholders 2 to 1. Given this move alone, stock price should have dropped to $1.50. But instead, stock price went up. Somebody is seeing something that is not apparant to us.

Maybe Bluegreen will be the acquirer of some distressed timeshare company. That would be a tremendously gutsy thing to do in this environment. We shall see.

[bnoble Senior Member Find all posts View Profile Close bnoble]

My interpretation is this is a move to secure capital to help buyers finance purchases---this is the big problem with developer sales right now, and that might be why the market has reacted positively to the news.

[vintner Super Moderator Find all posts View Profile Close vintner]

That is an intersting thought, rather than have a bank finance new sales, self finance with the new buyers paying interest to BG. Gives BG capital to be able to sell their point, kind of like GM using GMAC to get financing for the customers to buy a car.

[wtarrant Junior Member Find all posts View Profile Close wtarrant]

And if they start financing people...

...then they might qualify for some of the great government bailouts. (See GMAC) This could be even better news for BG!!!

[Jya-Ning Silver Contributor Find all posts View Profile Close Jya-Ning]

If the offering is not get as many takers as they hope, than what?

If it gets as many takers as they wanted, I think they have a good enough cash in hand, and very good chance to survive this storm.

Jya-Ning

[Spence Super Moderator Find all posts View Profile Close Spence]

That is an intersting thought, rather than have a bank finance new sales, self finance with the new buyers paying interest to BG. Gives BG capital to be able to sell their point, kind of like GM using GMAC to get financing for the customers to buy a car.

Check out who really owns GMAC.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

That is an intersting thought, rather than have a bank finance new sales, self finance with the new buyers paying interest to BG. Gives BG capital to be able to sell their point, kind of like GM using GMAC to get financing for the customers to buy a car.

Over yonder, I started a thread just on this very topic. I suggested that the timeshare industry should create its own GMAC type business by buying a bank and having it apply for TARP funds. People scoffed at me saying that nobody would put money into the stock of a company to finance timeshare purchases.

If it is true that Bluegreen is securing this capital to do just that, the fact that Bluegreen's stock goes up with such a dilutive move is proof that it can work. In essence, what Bluegreen would be doing is collecting financing from its customers secured by the timeshare assets they sell them. If the customers default, then Bluegreen gets the assets back and sells them to someone else. If the cost of capital is lower than the financing rate less repo costs for defaulting customers, then this could be acretive to earnings.