Nick Nichols
02Feb08
http://www.goldcoast.com.au/article/2008/02/02/7361_gold-coast-business.html
Once CVC's original offer for Stella was rejected last November, MFS put on a brave face and said it would continue to build the business and pursue a second exit strategy which, it said, would deliver better value for shareholders.
Consider then that a slighted CVC, which had dev-eloped an understanding of MFS's true debt position, saw MFS in a vulnerable light, at least more so than the rest of the market did.
Through associated hedge funds, the company could easily have been shorted.
In other words, CVC could have bet on a near-term MFS share plunge.
Rumours are quick to take hold in the market and the steady decline in MFS shares ended in a landslide on January 18, when the company announced it planned to separate Stella from its financial services business and needed to raise $550 million to do so.
Investors had lost patience in an increasingly tight credit market.
A short position would have made a fortune for a futures trader.
CVC may not have foreseen such a rapid fall in the MFS share price, a situation that was aggravated by margin-loan sell-offs that gave rise to a massive loss in fortune for some of the company's upper management, including Mr King, co-founder Phil Adams and former director Michael Hiscock.
The Stella cherry now appears ripe for the picking for the likes of CVC.
MFS
mfs limited
