“Coach, did you see that guy’s tattoo?’

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adam_sandler6.jpgDo you recall me telling you that some folks in Texas take high school football very seriously? In the “you can’t make this stuff up” category, the following is from this article in today’s Chronicle:

Bigger. Faster. Better beards.
Looking back now, it should have been obvious that something was amiss about the adult football team that Texas Christian School fielded three weeks ago in Austin.
Not to mention the tattoos.
“Some of the guys had tattoos and full beards and looked like they were like 25,” Not Your Ordinary School senior running back David Johnson said of his opponents that Oct. 28 afternoon. “At the time, we thought they were just sort of big.
“Now we see why they looked so old.”
It turns out Johnson and his team unwittingly played a six-man team made up of college-age players, coached by Texas Christian [High School]’s Herc Palmquist. The Texas Christian varsity team was told the game had been canceled and they had the night off.
Instead, Palmquist brought eight college-age players to play what he called a “pickup game,” which NYOS won 28-18.
Now, Palmquist is serving a five-game suspension leveled by the Texas Association of Private and Parochial Schools, which governs Texas Christian athletics.

Read the entire article. If Coach Palmquist gets canned over this, perhaps he could scout for the Texans? On the other hand, given that Texas Christian lost the game even while using college-age players, maybe not.

Checking in on GM’s Enronesque experience

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gm2.gifFollowing up on posts here and here from last week, General Motors’ seemingly relentless descent into a formal reorganization under chapter 11 continued yesterday as its share price fell to its lowest closing since December, 1991. Previous posts on GM’s developing problems are here.
Probably the best indication of the risk of a GM bankruptcy is in the credit markets. Over the past week, the price of a GM bond maturing in 2033 has fallen about four points (i.e., about $40 per $1,000 face value) to yield 12.9%. On the other hand, the price of protection against a GM default in the market for credit derivatives is increasingly expensive. As of yesterday, the price of protection — essentially insurance against a default — on $10 million in GM bonds had risen to above $2 million up front plus $500,000 per year. That compares with a $1.6 million up front payment for such price protection just last week.
Interestingly, GM remains reasonably liquid, with around $19 billion in cash or other cash equivalents, and that liquidity is often touted by the company in media releases as proof that it is not contemplating a bankruptcy case. However, as folks who are familiar with reorganizations know, a company that needs to go through a chapter 11 case is far better advised to do so when it is flush with cash than to wait until its cash reserves have been depleted. A company in need of a reorganization never should wait until it can’t afford to go bankrupt.

What half a million bucks buys you

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The Woodlands house.jpgLA house.jpgThe house on the left above is an example of what half a million bucks will buy you in the Village of Alden Bridge, a nice area of The Woodlands in suburban north Houston — a 3,600 square foot decorator’s home on a big, tree-filled lot, flagstone covered patio, 4 bedrooms, 4 bathrooms, gameroom, media, 2 staircases, dynamic kitchen, and a paneled study.
The house on the right is an example of what half a million bucks will buy you in Los Angeles — a 1,200 square foot, two-bedroom Craftsman-style house with a “sizable” frontyard in a neighborhood that is “on its way up.”
Read more about the crazy Southern California real estate market here. Hat tip to Craig Newmark for the link to the LA Times article.

Examining the train wreck that is the Texans

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lopez.gifRecent posts here, here and here have noted the lack of research and insight in recent articles by Chronicle NFL beat writer John McClain and columnist Richard Justice on the subject of the woeful Houston Texans. Into that vacuum of analysis, Chronicle sportswriter John Lopez stepped up with this excellent column on the questionable personnel moves of Texans’ General Manager Charlie Casserly, and he follows up on that effort with this interesting column today in which he questions Texans head coach Dom Capers’ management of the team’s coaching staff.
Regardless of whether you agree with Lopez’s views, his last two columns on the Texans contain the type of research and analysis that provides the reader with a grounded position to think about in evaluating the Texans’ surprising downturn this season. That’s far more satisfying than off-the-cuff observations that have little or no factual basis and sound more like water cooler banter than the insightful analysis that readers really want with regard to the Texans’ baffling situation that few people predicted (Clear Thinkers reader Don Mynack excepted) before the season.

The troubling case of the NatWest Three

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Natwest three6.jpgThe NatWest Three are the three former National Westminster Bank PLC bankers based in London — David Bermingham, Giles Darby and Gary Mulgrew — who are charged in Houston with bilking their former employer of $7.3 million in one of the schemes allegedly engineered by former Enron CFO Andrew Fastow and his right hand man, Michael Kopper (previous posts are here).
However, NatWest never sought to recover the funds from the three men, never pursued criminal charges against them in England, and neither the Crown Prosecution Service, the Financial Services Authority nor the Serious Fraud Office in the UK found sufficient evidence to prosecute. If a trial had taken place in the UK, then the three men could not be extradited to the US because of the principle of double jeopardy. But since no British trial has taken place, the British Home Secretary has granted the US extradition request under the Extradition Act of 2003, which was passed to facilitate extradition of suspected terrorists to the US. Under that legislation, the Home Secretary can extradite British citizens without the US authorities having to make a prima facie case — they need only set forth a statement of the facts that they hope to prove. To make matters even murkier, the Extradition Act is a one-way street — to extradite an American citizen from the US, the British still need to provide evidence that the American citizen has committed an extraditable offense.

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Charged with a crime in California? Just settle

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surgery.jpgTwo California doctors who were charged with criminal fraud in performing unnecessary heart surgeries at a hospital formerly owned by Tenet Healthcare Corp. have agreed to an unusual settlement that resolves the criminal charges and includes a settlement of related civil litigation that provides $32.5 million in payments to patients and federal insurance programs. The investigation included a highly publicized raid of the hospital, which Tenet eventually sold under the threat of losing access to the Medicare program.
As a part of the unusual deal, the doctors who were charged agreed to pay $1.4 million each and consented never to perform any cardiology procedures or surgeries on any patient covered by various government insurance programs, including Medicare. Nevertheless, neither of the docs admitted liability and one of them commented that the reason he settled was that he could not “continue to fight a system that is not interested in the truth.”

Settled again, with an assist from Dow Jones

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mike price4.jpgLast time we checked in with University of Texas at El Paso head football coach Mike Price, the former University of Alabama head coach (for about five minutes) was settling his $20 million libel lawsuit against Time, Inc.
Well, as you might have heard, Time backed off of that settlement a few days after its announcement. Time contended indignantly that Coach Price and his attorney had breached the settlement agreement by making public comments about the settlement and the litigation. Coach Price and his lawyer denied that any of their statements breached the agreement, Time went ahead and filed a motion with the Alabama state court requesting that the settlement be set aside, anyway.
Enter Dow Jones, Inc., venerable publisher of The Wall Street Journal. Dow Jones filed a motion with the court in the Price v. Time lawsuit requesting that the court unseal the terms of the defunct settlement and other records in the case, which included information regarding the identity of Time’s sources for what went on in Coach Price’s hotel room that summer evening in Pensacola. Time apparently said “Oops!” and promptly opposed Dow Jones’ request.
Regaining its senses, Time announced today that it had once again settled with Coach Price, which apparently moots the Dow Jones motion in the court’s view. This time, Coach Price and his attorney could not be reached for comment on the settlement, thank goodness.
However, Coach Price has arranged for a several sideline passes to UTEP’s next game to be held at the will-call window for Dow Jones. ;^)

J&J and Guidant settle

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guidant_logo_web2.jpgJohnson & Johnson and Guidant Corp. announced a revised acquisition deal this morning that values Guidant at $21.5 billion, about $4 billion lower than the original price, and settles the companies’ lawsuit over J&J’s decision to walk away from the previous deal because of a material adverse effect on Guidant’s financial condition.
No word yet on how much of that $4 billion will make it into the “Spitzer for Governor” campaign war chest. ;^)

The best defense is a good offense

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Refco Logo8.jpgThomas H. Lee Partners, Ltd is the private equity firm that bought a big stake in Refco, Inc. last year and held a 38% equity stake in the company after Refco went public in August of this year. With Refco’s recent descent into bankruptcy, that equity stake is now worthless.
Notwithstanding that rather disappointing investment, Thomas H. Lee Partners is a defendant along with former Refco CEO Phillip Bennett and several other Refco executives and consulting firms in several civil lawsuits by investors seeking substantial damages that have been filed since the revelations about Mr. Bennett’s short-term lending arrangement between Refco and one of his personal investment companies. More lawsuits over its involvement with Refco and Mr. Bennett are almost a certainly for Thomas H. Lee Partners.
So, having made this stupendously bad investment and getting sued out the gazoo to boot, what should Thomas H Lee Partners do to defend itself? Well, how about go on the offensive?

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Life after Hank

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Greenberg13.jpgCouldn’t help but notice that American International Group Inc. announced yesterday that its third-quarter net income fell 36% to $1.72 billion (65 cents a share) as a result of recent large catastrophe losses. This comes on the heels of the announcement from last week that AIG would restate its results dating to 2002 to correct errors in the way it accounted for certain types of derivatives contracts, which restatement came only six months after AIG had completed an earlier restatement for the same periods. Just to make matters as murky as possible, AIG also also announced yesterday that it had revised its results for 2000 and 2001.
Inasmuch as yesterday’s earnings announcements were in line with forecasts and came after the close of trading, they did not have much of an impact on trading. AIG’s shares increased 26 cents to $67.50 in regular trading yesterday and, in after-hours trading, the shares dropped 30 cents to $67.20. The stock hit a 52-week low of $49.91 this past spring during the period in which the company restated five years of results and cut shareholder’s equity by $2.26 billion as New York AG Eliot Spitzer sparred with former AIG CEO, Maurice “Hank” Greenberg. For the first nine months of this year, AIG’s profits were $10.02 billion ($3.82 a share), which is up from its restated (twice) profit of $8.3 billion ($3.14 a share) for the first nine months of 2004.

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