Wachovia's NovaStar Waivers: D-Day Delay?

It’s getting to be a joke. Week after week, month after month, Wachovia (WB) has been extending waivers on broken covenants by NovaStar (NFI). The latest extension, until January 4, follows an extension last week.

Makes you wonder if either Wachovia's possible financial hit from NovaStar is bigger than generally expected and/or somebody has pictures on someone and/or Wachovia is merely pushing this off so it will be next year’s problem. (After all, if Wachovia doesn’t grant the waiver, it gets a bunch of worthless assets.)

Another possible interpretation: More mortgage-related writeoffs at Wachovia would appear to be in the offing.

The beat goes on…

Comments

[Pj568:]

I haven't followed the Wachovia story but assuming they are not in denial like WM or CFC.

Another possible interpretation would be they have adequately reserved the NFI loss and the extensions are a form of loss mitigation.

2007 Dec 11 09:10 AM

[Buccephalus:]

I believe the word is "Greed"! Pay out the big WB bonuses in
December and defer the bad news until next year.

2007 Dec 11 10:46 AM

[Berkstock3:]

Herb,

why do you care so much about Novastar staying alive. It's about a $40 million market cap company. Big deal right?

My question to you is this. What about the shareholders?

There are people holding NFI shares in retirement accounts that have their shares listed as "other."

Why are they listed like this you may wonder. Because with about a 9 million share float and over 80% of the company float sold short there are not enough shares to go around even in retirement accounts.

This should concern you enough to write about it if you believe in the Main Street shareholder and his/her protection.

2007 Dec 11 09:08 PM

[Berkstock3:]

The amazing thing about the NFI story is how Herb Greenberg and the boys have hammered on NFI for years holding the company on the cross to die only to watch it survive in the credit crunch of 2007.

How funny is that? Novastar is a 30 million dollar company and the keystone cops cant make NFI just go away.

Why hasn't the New York Stock Exchange delisted NFI some people may wonder? I believe that its because they dont want to bring any attention to this story and let people know how bad the shareholders have been wronged by manipulation under the NYSE watch.

Short term $8 price target
long term $32 a share

2007 Dec 21 01:03 AM