Twocents

Do Paulson and Bernanke Really Understand What's Going On?

Agree with your take. However, I believe your analysis somewhat under-estimates the amount required as it is based on 'historical' rather than 'projected' figures- hence you would need to increase the amount required by at least ,say,40% to provide sufficient confidence that it was enough to see us through additional losses already 'in the pipeline'.

Steak N Shake's New Direction Is Terrific News for Shareholders

Jeff,
I am curious- did the Chairman make any mention of SNS defaults on their loan agreements at the shareholders meeting you attended?
Or any mention of the fact that the lenders had subsequently decreased SNS borrowing facilities by $15 Million?
How about the $20 million debt payment being accompanied by a decrease in net property, plant & eqpt. of over $35 million (with under $8m due to depn.)- thus decreasing Net Worth?.
I have a real problem reconciling the tone of your write-up and the facts reported in their 10Q filing, and will be very concerned with
Chairman Biglari's credibility if you indicate that he did not discuss any of the above at the meeting. Or are any of my observations incorrect?

Steak N Shake's New Direction Is Terrific News for Shareholders

Jeff-
Is it reasonable to leave Capital Lease Obligations (CLOs) out of the calculations? I do not believe we should.

Anyway, regardless of whether your or my opinion is correct, I believe that both Bank Agreements noted in the Company's latest 10Q have restrictions based on ratios where LTD is defined to include their CLOs. You can verify this.

While their approach is in agreement with mine (and I would argue, though debatably, most 'seasoned' financial analysts), it is particularly worrisome that both banks have reduced the available credit under their loan agreements while applying 'tighter' restrictions. This may be just a 'sign of the times'- but I wonder if it might indicate something of a lending 'squeeze' ( or skepticism of the new Chairman?).

In view of the extent to which the Company's Assets are already tied up in the existing Bank Agreements (see attachments to Company's latest 10Q), unless there is a rapid turnaround in their operations, I question what options will be available to the Company. I believe 'Operations' will be the key- and I wonder who is 'on board' to effect the required improvements.

Comments?

Steak N Shake's New Direction Is Terrific News for Shareholders

How do you calculate a current EV of "about $240mm"?

And how come 'debt would be near zero after paying down $25mm worth', when the latest Balance sheet shows LTD alone in excess of $152mm and a very significant negative Net Current Asset position ?

Cannot follow your argument/figures.

Bert