Wednesday, June 10, 2009

What should $20 million buy? How much walking-around money do FCE family members have?

Forest City Ratner reportedly wants to pay just $20 million to the Metropolitan Transportation Authority for the portion of the Vanderbilt Yard it needs to build the Atlantic Yards arena. It initially promised to pay $100 million for the whole railyard. This series attempts to add some context.

From the Cleveland Plain Dealer:
Forest City executives expressed confidence in the company's future and pointed to the success of their recent stock offering, which netted nearly $330 million.

President and Chief Executive Officer Charles Ratner said the company's guiding families -- the Ratners, the Millers and the Shafrans -- bought $20 million worth of that stock. Existing investors bought many of the 52.3 million shares involved in the offering. The company will use the proceeds to repay debt.

"Liquidity trumps dilution," Charles Ratner said. "Liquidity trumps everything."

(Emphasis added)

Well, yes, liquidity is important, so that's why the developer apparently doesn't want to pay the MTA more than $20 million. But the families seem to have an extra $20 million lying around, don't they?

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