UPS to increase debt by $10 billion

Discussion in 'UPS Union Issues' started by Baba gounj, Jan 9, 2008.

  1. Baba gounj

    Baba gounj pensioner

    Well the BOD has decided to borrow $10 billion to repurchase stock & increase oversea small parcel growth.
    When they approved the CS pension deal that cause their AAA bond rating to drop.
    So now they want to increase the level of spending to inflate the stock price.
    That $10 billion could have been used to sweeten our contract.
    Anyone else feel like they have been used ?
  2. IDoLessWorkThanMost

    IDoLessWorkThanMost New Member

    You're lucky to be going out in 5 years...
  3. tieguy

    tieguy Banned

    Borrow money to pay the payroll? Are you serious?

    Realistically looking at the timing of the sudden drop in the stock price it appears investors may have started reviewing the new contract and its cost to the bottom line.
  4. Fredless

    Fredless APWA Hater

    ....right. Because that's a good way to run a profitable business.
  5. Captain America

    Captain America SuperDAD to the rescue

    This company used to be different and I thought better. This is just another sign of the times.
  6. BigBrownSanta

    BigBrownSanta New Member

    The sudden drop in the stock price has very little to do with the contract. More likely the record high price of oil, the falling value of the dollar, the writeoff of additional billions in losses from the mortgage lenders, the weak christmas retail sales, the latest new jobs report, the rumor of recession... investors are nervous and heading for less risky investments.

    The overall market has been taking a beating so far this year and I don't think it had anything to do our contract.
  7. paidslave

    paidslave New Member

    I think you have this confused tieguy.....The poster simply mentioned in lamens terms, instead of BORROWING more money to repay UPS management in STOCK to a few SELECT people......You may know a few, what he was saying, simply to enhance the contract in expectation of increased revenue. UPS has forcasts all the time for REVENUE and they do also know how much Management gets in STOCK. Looks like some one is gonna get lots of cash before it is claimed on ACTUAL revenue...10 billion dollars stock repurchase and they are borrowing for that? How can that be? Seems fishy to me! I wonder if the 10 Billion was handed out already? I wonder how the interest will get paid?

    Did you get yours yet? And we are borrowing for repurchase?...hmmmmm sounds like the package is going out the back door!

    Bet the drivers don't get 10 billion...........sorry for all the questions!.......

    FAVREFAN Member

    Wow. I don't believe it. Someone who knows what the hell they are talking about. Maybe there is hope.
  9. JustTired

    JustTired free at last.......

    If they're using some of that money to attempt a buyback of stock that is on the open market, then I'm all for it. I think the public offering was a big mistake. There's a handful who were at the top who would disagree. But, hey, they're long gone.

    Just curious.......does anyone know of a company who went public and then reverted to being privately held? I'll admit I'm clueless as to knowing of any. It's got to be pretty hard to get that cat back in the bag.
  10. tieguy

    tieguy Banned

    All of those things have been going on for a while . Whats interesting is it took a huge drop since we announced the contract has been ratified.
  11. tieguy

    tieguy Banned

    your right it does ramble pretty bad. You're attempt to bold some points did not work that well. Nothing to be confused about here if you're borrowing money to pay the payroll then you better be preparing for chapter 11. Putting a different spin on it does not change that point.
  12. paidslave

    paidslave New Member

    True! Actually, I Don't think it is a bad idea! I can't imagine though the interest payment on 10 billion dollars to buy stock at 5 or 6 percent interest. Better than borrowing for the payroll!

    I didn't mean to throw a different spin on this but borrowing for paper stocks is risky too! Hopefully it is simple interest! Margin is always risky business!
  13. john61

    john61 New Member

    Servicing debt can be cheaper when compared to weighted cost of capital. Also consider interest expense is deductible and fewer outstanding shares reduces the total cost of dividends paid.
  14. BigBrownSanta

    BigBrownSanta New Member

    (click on the 3 month chart (3m) move your cursor over the chart to view the days)

    The share price was on a steady decline prior to the announcement of the ratification of the contract.

    The contract was officially ratified Dec. 19th (according to the IBT website). The stock price that day was $71.30.

    The stock price started upward from that day until 24 Dec where it peaked at $73.20.

    From that point it has dropped daily to $66.64 on 08 Jan 08.

    If anything, the announcement of the ratification of the contract caused the share price to increase.

    The overall steady decline is due to the market.
  15. tieguy

    tieguy Banned

    Meanwhile the oil prices have been in constant turmoil well prior. Concerns about the economy well prior to these dates. Interests rates, inflation concern about a slow christmas peak season well prior. Yet the stock stayed up in the 71 through 73 range through all that. then the stock takes a huge drop thus my comment that long term investors were possibly starting to read through and absorb the huge cost behind this contract and dumping the stock. That 6.1 billion dollar hit is going to scare people away from this stock as we go along. I imagine we will be getting tempered earnings expectations soon due to the slowing economy. Some analysts will then try to read between the lines and throw the labor contract in there as a reason. This company is gambling that that 6.1 billion will be well spent in the long run. They have lost their top credit rating and they are now getting ready to absorb 10 billion dollars worth of debt. All of these are reasons the stock took a huge drop not the other factors which were present before.
  16. Channahon

    Channahon New Member

    Just tired, to answer your question about a public company going private again. Here's one and some interesting thoughts and comments.

    Aramark is going private for the second time, after the food services company’s directors approved an $8.3 billion buyout offer by chairman Joseph Neubauer and a group of private-equity investors.
    Aramark (nyse: RMK - news - people ) shareholders will receive $33.80 per share, slightly higher than Monday's closing price of $33.05.

    The buyout parties include Neubauer along with GS Capital Partners, CCMP Capital Advisors, J.P Morgan Partners, Thomas H. Lee Partners and Warburg Pincus. T

    The deal includes the assumption or repayment of roughly $2 billion worth of debt. The buyout price represents an improvement from the $32 per share Neubauer and his partners offered stockholders on May 1.

    In a press release on Tuesday, the company said it expects the deal to close by early next year, subject to shareholder approval.

    Neubauer owns a class of stock with extra voting rights, but he will not be allowed to exercise them, giving him less than 5% of the ballot.

    That shouldn't be a problem, as the current price is "fair…compared to other food service or business service companies with comparable gross rates," according to Bruce Simpson, an analyst for William Blair & Company.

    The buyout comes at a time when private equity firms have or are raising roughly a half trillion dollars in investment funds. As a result, a number of companies have taken themselves out of public hands.

    "Corporate America is at record profitability levels and yet the stock market averages are where they are or lower than they were four years ago," said Simpson. "It just isn't that lucrative to be a public company as it once was."

    The analyst said major changes at Aramark are unlikely: "There are probably some assumptions that they will try and tighten up concerning cost structure, but I wouldn't think it would cause real change to the business."
  17. JustTired

    JustTired free at last.......

    These "private equity firms"........are they American firms or are they players such a "Communist China" and the like? I'm guessing the latter and it would be another example of the "Selling of America" so pervasive now. When will this country wake up and realize that the real enemy is "corporate America" and the need for greed?
  18. GuyinBrown

    GuyinBrown Blah

    More than likely, about 3 snooze alarms too late...... :wink2:
  19. brownmonster

    brownmonster Man of Great Wisdom

    My wifes company was public and was recently bought out and went private. Best thing that could have happened. Now they can run the business without being second guessed by analysts and shareholders. I never figured it out but at the rate UPS stock was going up in the late 1990's we would have been better off as shareholders had the company stayed private.
  20. tieguy

    tieguy Banned

    I didn't understand the point. Corporate america is also ups which provides us with the jobs we have?

    Many investors in this country also invest in china?