Tuesday, December 18, 2012

Laundering Securities: Harbinger, Spectrum Brands, Tong Lung Metal Industry Co. Ltd, and Stanley Black and Decker

Harbinger Group Inc is nothing but a special purpose vehicle constructed for the purpose of dumping illiquid, unwanted securities held by Falcone which he manipulated higher via complex share schemes, Enron style accounting, and things like payments to Fitch Ratings..  I believe it goes one step further however, and acquisitions such as the Stanley Black and Decker, are actually intended to acquire real and synthetic exposure to certain asset classes for which certain hedge funds are looking to short. 

This is how it was done in 2007 I've come to learn in my research, and I see the exact same thing happening now.  Same lines of business, same corporate structures, same types of mergers and joint ventures, and same corporate emphasis on expanding the balance sheet with debt and equity with no regard for long term survive. The behavior of insiders, patterns in share prices, and the same public misinterpreting the actions of certain hedge funds and their 13F-HR just as we saw 5 years ago.

“The Harbinger Parties hold a majority of our outstanding common stock and have interests which may conflict with interests of our other stockholders and the holders of the notes.”  sec.gov/

That’s all you need to know when trying to understand the transactions which Falcone and Co have entered into on shareholders behalf.

“Spectrum Brands, Madison, said Monday it has completed the acquisition of Stanley Black and Decker's hardware and home improvement group for $1.4 billion, adding locksets, builders' hardware and faucets, such as Kwikset, Stanley and Pfister, to its range of consumer products.”  http://host.madison.com

I have a hard time understanding just what it is Spectrum Brands paid 1.4 billion dollars for; a 5 year trademark license?
“Spectrum Brands only has the right to use certain Stanley Black & Decker trademarks, brand names and logos for a limited period of time. If Spectrum Brands fails to establish in a timely manner a new, independently recognized brand name with a strong reputation, its revenue and profitability could decline.”

“In connection with Spectrum Brands’ acquisition of HHI, it received a limited right to use certain Stanley Black & Decker trademarks, brand names and logos in marketing its products and services for only five years. Pursuant to a transitional trademark license agreement, Stanley Black & Decker granted Spectrum Brands the right to use the “Stanley” and “Black & Decker” marks and logos, and certain other marks and logos, for up to five years after the First Closing in connection with certain products and services. When Spectrum Brands’ right to use the Stanley Black & Decker trademarks, brand names and logos expires, it may not be able to maintain or enjoy comparable name recognition or status under its new brand. If Spectrum Brands is unable to successfully manage the transition of its business to its new brand, its reputation among its customers could be adversely affected, and its revenue and profitability could decline.”  http://www.sec.gov/


Spectrum acquired 171 million dollars with of “HHI “residential and commercial hardware, including door knobs and handles, locksets and faucets….80% more than property, plant and equipment!

I added up accounts receivable, inventories, goodwill, costumer relationships, trade names, patents and technology, and I get 1024 Million dollars; or 82% of total assets.  I really question the value assigned to these, especially given Harbinger and Spectrums past history of playing games with goodwill/intangible assets.  Not to mention the pending securities fraud charges against Falcone and the disclosed conflicts of interest.
Regarding the 2nd piece of the Stanley Black and Decker deal, Tong Lung Metal Industry Co, something dirtay is going on with this entity and I feel it could be related to constructing exposure to Asian real estate.

 “The Hardware Acquisition, when completed, will include the purchase of shares and assets of certain subsidiaries of Stanley Black & Decker involved in the HHI Business. Furthermore, the Hardware Acquisition, when completed, will also include the purchase of certain assets of Tong Lung Metal Industry Co. Ltd., a Taiwan Corporation ("TLM Taiwan"), which is involved in the production of residential locksets.”

“The Company was part of the Parent’s accounts receivable sale program in fiscal 2010 and 2011. According to the terms of that program, the Parent is required to sell certain of its trade accounts receivables at fair value to a wholly owned, consolidated, bankruptcy-remote special purpose subsidiary (“BRS”). The BRS, in turn, must sell such receivables to a third-party financial institution (“Purchaser”) for cash and a deferred purchase price receivable. “

The 2nd paragraph about bankruptcy remote special purpose subsidiary and the selling of receivables to financial instructions sounds like General Growth Property.  So I wonder if the transaction and transfer of ownership overseas into Spectrum Brands could be an attempt to make recovery more difficult?  Assuming Tong Lung has been originating certain notes in Taiwan to financial institutions.
Not So Bankruptcy-Remote SPEs and In re General Growth Properties Inc.


IHS.Research AT Mail.Ru

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