Stock Cancelation

[mrborabora]

Is there any warning when the stock is cancelled and if the stock price keeps climbing is there a chance that the stock will not be cancelled?

[Admin]

Hello mrborabora,

Stocks are normally canceled at the time that the company exits BK and the average time is around 12 to 18 months for an exit.  

However, Dana is an unusual case so the exit time could be much shorter.

[potkan]

Why is Dana unusual case?

[Sal]

Dana is unusual for many reasons and I will mention a few.  Dana is a worldwide company but only part of it in the US has filed for bankruptcy.  Debts could have been restructured without BK.  

Dana rushed into BK and it is my opinion that the Board of Directors and executive officers were not acting in the best interest of the company or the owners of the company.  It is my opinion that the only reason that they filed for BK was to rip-off anyone that they could, including the owners “stockholders” to enrich themselves.

The problems were not operational and while there was a slowdown in the sector of business that Dana is in, that is a poor excuse to go BK.

All business go through good times and bad times.  It is the badly mismanaged companied that end up BK Court.  

Dana reported sales of $7,505 million for the nine months ended September 30, 2005, compared to $6,755 million for the same period in 2004.  That is around an 11% increase.  The problems are not operational.  It is a management problem.

Dana also reported a $1,226 million net loss for the same period.  How does a company that has been in business for many years report an 11% increase in sales and at the same time report astronomical loss of 1.2 billion dollars.

In a sec filing dated March 16, 2006, Kenneth A. Hiltz, CFO breaks down the loss.

A valuation allowance for net U.S. and U.K. deferred tax assets $918 million.

An impairment charge of $275 million

Charges related to a sale of a business approximately $16 million.

I am not an expert and perhaps someone else can chime in but it looks like most if not all of the so-called losses are paper losses.  

All SEC filings are available from this website’s home page under “Dana SEC Filings” link.

The contents of the March 16, 2006 filings follow:

[octopi]

I agree, I believe they used the 1.2 bil loss number to scare everyone in to thinking things were alot worse than what they were.  Not saying things were not bad at Dana, because they were.  Tell me how a company with about 700 million in cash at the end of the 3rd quarter has to file bankruptcy in March?
I think the 4th quarter loss would have been probably something around a $50-70 million loss.  Rather than anounce that they delayed the news (and now have put it off again until the end of April) allowing the 1.2 bil number to be fresh in everyones mind.
Dana was not burning that much cash quarter to quarter.  I believe Burns  and BOD should have been looking to merge with someone. With their customer base and being the 15th largest supplier surely they could have found someone.  They did the employees, retirees and shareholders an injustice.

[NEONINK]

And don't blow a gasket.... but for you folks in the auto industry...

Since the 70's the American car and parts makers have been on a slow slide with foreign competition, and that was only the Japanese makers, now you have Korea, Mexico, and eventually China.  Yet you still clung, tooth and nail, to the UAW.  Now, how many other Americans can point to that type of guarantee?  None!

We've all heard of the stories with floor sweepers making minimum $17/hour; and that's not even taking into consideration the massive benefits.

If you or I were owner of a company, do you really think we could afford to pay the high school dropout $17/hour for cleaning up?

I believe this is why American companies are looking at bankruptcy as their only option with these labor contracts.  And I'm sure this is why Dana Corp. opted for BK.  Of course, stockowners got caught in the crossfire.  

Which... uh, that would be me and you as well.

[hayesdanaman]

Paying a few people 17 dollars an hour to sweep in no way causes a corporation to go bankrupt

[ButchH]

I was a Dana employee for 32 years until they sold the plant i worked at to Eaton Corp. That plant made 25 to 30% profit every month and Dana sold it, doesn't make sense. I was luckey to retire from Eaton instead of Dana. You don't think the bankrupt situation had anything to do with paying CEO and upper managment bonuses for losing money, Burns got a $1,000,000 bonus last year for losing money. Don't blame the UAW for the company mismanagement.

[cvs]

Everyone is talking about the worst. While many decisions have not been good, the decision to cancel the outstanding stock has not yet been made, therefore the option of keeping the existing shares is possible.

I don't understand how Dana could cancel stock while the International holdings are not part of the bk. Their seems to be a disconnect now between International vs. US holdings vs. BK.

[wcra]

I still have 18,000 shares purchased from the Dana Stock program at an average cost basis of $25/SHARE.  I notice the number of posts to the web site has reduced but there are many answers we as shareholders need to get and we need to keep the site open see if any one has answers to our questions. I would like to know what can we do now or are we at the mercy of the court?I did send a letter the Judge and hope everyone else does also.

wcra

[NEONINK]

I believe there are only 150 million shares.  In relative terms, that's not bad.

I do not know the number of shareholders now, at one point, I think I saw the number around 47,000?  

Please write the judge your sentiment of the situation as well; how it has affected you, how you read the published SEC filings and published Balance and Income statements showing adequate standing, reorganization, selling the credit portion of the business, and ample assets.

[NEONINK]

In terms of tactics, I guess every company could claim "tactical bankruptcy"...  How would the NYSE work then?  When will concerned stockholders take back Boardrooms?

Forbes calls what Dana did, tactical.

Source: Forbes.com
Dana's Woes Underscore Detroit's Dilemma
Aaron Hines, Distressed Debt Securities 04.18.06, 12:00 PM ET

MIAMI -

In what has become a monthly event for this newsletter, another auto parts heavyweight is headlining the default list. On March 3, 2006, 102 years of normal operations came to a halt when Ohio-based Dana Corp. filed for Chapter 11 bankruptcy.

In filings with the Manhattan bankruptcy court, Dana listed assets of $7.9 billion and liabilities of $6.8 billion. The most recent results it has reported were third-quarter losses of $1.27 billion.

Sharp production cuts at General Motors and Ford Motor —the company's two largest clients, which together account for 36% of its business—and rising costs for raw material have played a major role in the company's financial decline.

Dana is the fourth major auto parts producer to file for bankruptcy in the last 13 months, following Tower Automotive, Collins & Aikman and Delphi.

Dana's position is somewhat unique—and perhaps troubling—in that unlike most parts producers, it's already paying wages in line with industry non-union norms, which makes it difficult to create any savings from reducing wages. And because Dana is an independent company, it cannot expect financial assistance from a parent company, as Delphi or Visteon received.

Also, in contrast to Delphi's so-called "tactical" bankruptcy, it appears Dana simply ran out of options. However, less than 40% of the company's 19,000 employees are unionized, which may make it easier to implement what little wage-reduction possibilities there are.

Dana's president has said the company will look to cut costs by closing factories, divesting businesses and moving production to cheaper overseas locations. It will also look to wean itself from the Big Three and increase business with clients like Toyota and Nissan.  In the meantime, Dana has secured $1.45 billion in financing to continue operations while under bankruptcy protection.

So far, the company's bond prices have reacted positively to the filing, increasing on average 10 to 15 cents. The 5.85% bonds due 2015 have shot up more than 13 cents to around 77 cents since it filed for bankruptcy, and all bonds are currently trading between $76 and $80. Ironically, this is higher than the $66 level at which GM bonds trade.  Dana has $2.024 billion of corporate bond debt spread across 11 issues, with an average coupon and maturity date of 8.38% and 2016.

Dana will also explore a breakup of the company or a white knight scenario. Investors like Carl Icahn, Wilbur Ross and Kirk Kerkorian, with access to billions, would seem likely candidates to become involved in the restructuring.

Ross has already bought several bankrupt car-parts companies, including Collins & Aikman's European operations.  Ichan, who is one of the largest investors in Federal-Mogul, recently helped steer it out of bankruptcy by drastically cutting costs and consolidating operations.  Ross and Kerkorian have both previously expressed interest in buyouts of other car-parts producers. Any potential buyout or acquisition by a flush investor might provide a favorable recovery for bondholders.

With any luck, this latest bankruptcy could serve as a catalyst for an industry-wide turnaround.  The news of Dana's filing quickly spilled over to the car-manufacturing sector on fears of parts shortages.  Ford's debt rating was immediately downgraded even further into junk status (BB Fitch), and the Big Three's collective stock prices slumped. GM is currently in a battle of its own, fighting to stave off a Delphi strike that could dry up more than 16% of its parts supply and lead to plant closures.

Foreign price and quality have rapidly marginalized U.S. legacy auto producers, and in turn, parts makers. In the old days, auto producers were able to squeeze the parts makers when times got bad. As evidenced by the spate of recent bankruptcies, there's not much left to squeeze, and only major restructurings remain. Any way you look at it, the U.S. auto industry is heading for a colossal makeover.

Aaron Hines is editor of the Distressed Debt Securities newsletter, and Richard Lehmann is the publisher.

Link

[Axle Man]

[Axle Man]

[quote="NEONINK"]

Forbes calls what Dana did, tactical.

Source: Forbes.com
Dana's Woes Underscore Detroit's Dilemma
Aaron Hines, Distressed Debt Securities 04.18.06, 12:00 PM ET

MIAMI -

Also, in contrast to Delphi's so-called "tactical" bankruptcy, it appears Dana simply ran out of options.


I think you misread the article - you stated in your opening comments that Forbes stated that Dana's BK was tactical - they were actually referring to Delphi and then went on to say that Dana simply ran out of options.

Just thought I would bring it up.

[NEONINK]

True. thanks for the catch.

However, I think Forbes failed to call Dana's move tactical, but should have.  I'm mean... come on... "ran out of options"...  The damn company has been in business since the early 1900's.  One would think they could figure out how to balance their checkbook somewhere along the way.  

I'll tell you another thing, if I had a business that built parts from steel; during that 104 year tenure and prosper, I would have bought at least one steel business to support my needs, just in case.  

Tactics is defintely involved.  I think Dana's mgmt probably wants to get out of some loser contracts, just as Delphi is bucking GM's contracts.  Of course, GM crying, but we made you...  I'm with some other poster, how many businesses allow their customers to come in, look at their books, and decide what to pay them?

btw, Ford is trying to change bankruptcy law now, whereby they can go into a bk company and claim their proprietary equipment without having to ask the courts.  I would bet that is Dana related.  Ford would then have the option to take that equipment to another supplier.