Scepticism Too Adept Finance Journalism: Focus Media Edition
On the 13th of August 2012 Focus Media received a go-private proposal from its founder as well as a collection of soul equity firms.
That was 94 days agone - a fleck over 3 months.
In that fourth dimension at that spot has been real few announcements from the company.
Second quarter results were announced 22 August. All they said most the bargain was every bit follows:
There has been no annunciation since.
That is 83 days of nothing. Well non quite nix - the companionship announced that they were having an AGM but did non cite the go-private proposal.
83 days is a long fourth dimension for at that spot to move no-progress on a bargain which had "highly confident" funding. Surely at that spot is some evolution - positive or negative - to study inwards that 83 days.
The Focus Media go-private bargain is controversial
Even without 83 days of nix this bargain would move controversial. Muddy Waters - the interrogation theatre that exposed the fraud at Sino Forest - has been Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9, Part 10, Part 11, Part 12, Part 13, Part 14, Part 15, Part 16, and Part 17.
My many component subdivision serial did non evidence that the accounts are fraudulent. It did nevertheless demonstrate some peculiar things - for instance the companionship purchased many seemingly unrelated businesses registered inwards the British Virgin Islands where all of those businesses somehow had the same address at the same lawyers office. Moreover inwards at to the lowest degree 1 instance they closed on the purchase of a concern (by purchasing its asset company) earlier that asset companionship was fifty-fifty registered.
Here is the rub. Either this bargain is existent as well as only very slow or this bargain is a consummate present pony whereby insiders are dumping huge amounts of their shares - shares valued on a multiple of turn a profit from highly peculiar accounts.
In 1 instance the stock should conk to $27 - the take-out price. In the other instance the stock should conk to unmarried digits (possibly zero) because it is a show-pony dressed upwardly to extract monies from Western investors.
83 days since the latest news, 94 days since the annunciation of the deal. Remember that.
The "Fourth Estate" has non been silent
Progress of this bargain is newsworthy. This is the largest leveraged buyout bargain always inwards mainland People's Republic of China - a watershed for the Chinese soul equity business. And the media loathe a vacuum.
There direct maintain been 2 fundamental intelligence stories since the bargain was announced. Each has acted to back upwardly the stock.
The showtime even out was inwards Basis Point (an manufacture magazine) as well as said that Merrill Lynch, Deutsche Bank as well as UBS were going to assist finance the Focus Media deal. That even out was sourced to "two people familiar alongside the transaction". In other words anonymous sources.
Those banks were to move joining the 3 master copy banks on the bargain (Credit Suisse as well as DBS). Again sourced to "the people".
These anonymous people were real specific: "the half-dozen banks excogitation to render a total of $1.65 billion inwards financing, made upwardly of a cash twain loan, a long-term loan as well as a high-yield bond".
The Wall Street Journal even out was dated 2 November. One of the Ho/Steger anonymous sources said "the banks volition sign the formal financing documents side yesteryear side calendar week at the earliest".
Needless to say that has non happened either.
Has the Wall Street Journal been played?
Good anonymous sources are component subdivision of journalism - but whatever journalist should ensure that they are non existence played alongside self-interested falsehoods yesteryear these sources.
It looks awful similar Basis Point were played. They published the financing was probable to move finalised inwards "two to 3 weeks" as well as it is straightaway 2 months. The data could direct maintain been proficient as well as the timetable slipped - but every bit at that spot was no follow upwardly from Basis Point it is probable the data was apartment false.
It is also possible that Ho & Steger (and the WSJ) direct maintain been played every bit well. It might be truthful that Merrills, Deutche as well as UBS direct maintain all joined forces to closed this bargain (in which illustration the Wall Street Journal has a story). But if non the even out is a journalist's train-wreck - as well as should cast into incertitude all the operate yesteryear these fine journalists.
I started writing what I idea a journalist should create alongside an anonymous source when the source has been lied to them - but at that spot are people far to a greater extent than versed inwards journalist ethics than me. But forget the ethical number - this is for fiscal newspapers a concern issue.
The fiscal press is the solely component subdivision of the impress media that has managed to flora pay-walls to a greater extent than or less their content. And for proficient argue likewise - reading the fiscal press is most making coin as well as y'all tin justify paying for that.
But when gullible journalists are played as well as then acting on data inwards the fiscal press becomes a manner to lose money. And what is the indicate inwards paying for that?
John
That was 94 days agone - a fleck over 3 months.
In that fourth dimension at that spot has been real few announcements from the company.
Second quarter results were announced 22 August. All they said most the bargain was every bit follows:
Announced Receipt of "Going Private" Proposal
On August 13, 2012, the Company announced that its Board of Directors had received a preliminary non-binding proposal letter, dated August 12, 2012, from affiliates of The Carlyle Group , FountainVest Partners, CITIC Capital Partners, CDH Investments as well as mainland People's Republic of China Everbright Limited as well as Mr. Jason Nanchun Jiang, Chairman of the Board as well as Chief Executive Officer of Focus Media, as well as his affiliates (together, the "Consortium Members"), that proposes a "going-private" transaction (the "Transaction") for $27.00 inwards cash per American depositary share, or $5.40 inwards cash per ordinary share. According to the proposal letter, the Consortium Members volition shape an acquisition companionship for the role of implementing the Transaction, as well as the Transaction is intended to move financed alongside a combination of debt as well as equity capital. The proposal missive of the alphabet states that the Consortium Members direct maintain been inwards discussions alongside Citigroup Global Markets Asia Limited, Credit Suisse AG, Singapore Branch as well as DBS Bank Ltd. most financing the Transaction as well as that these banks direct maintain provided certainly of the Consortium Members alongside a missive of the alphabet dated August 11, 2012 indicating that they are highly confident of their powerfulness to fully underwrite the debt financing of the Transaction discipline to the terms as well as atmospheric condition fix out therein.
The Company's Board of Directors has formed a commission of independent directors (the "Independent Committee") to consider the proposed transaction.
No decisions direct maintain been made yesteryear the Independent Committee alongside honor to the Company's reply to the Transaction. There tin move no assurance that whatever definitive offering volition move made, that whatever understanding volition move executed or that this or whatever other transaction volition move approved or consummated. The Company does non undertake whatever obligation to render whatever updates alongside honor to this or whatever other transaction, except every bit required nether applicable law.On 23 August the companionship announced that the independent directors had hired advisers to assist them assess whatever bid. To quote:
SHANGHAI, Aug. 23, 2012 /PRNewswire-Asia/ -- Focus Media Holding Limited ("Focus Media" or the "Company") (Nasdaq: FMCN) today announced that a commission of independent directors of the Company's board of directors (the "Independent Committee") has selected J.P. Morgan Securities (Asia Pacific) Limited ("J.P. Morgan") every bit its fiscal advisor as well as Kirkland & Ellis International LLP ("Kirkland & Ellis") every bit its legal counsel.
There has been no annunciation since.
That is 83 days of nothing. Well non quite nix - the companionship announced that they were having an AGM but did non cite the go-private proposal.
83 days is a long fourth dimension for at that spot to move no-progress on a bargain which had "highly confident" funding. Surely at that spot is some evolution - positive or negative - to study inwards that 83 days.
The Focus Media go-private bargain is controversial
Even without 83 days of nix this bargain would move controversial. Muddy Waters - the interrogation theatre that exposed the fraud at Sino Forest - has been Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9, Part 10, Part 11, Part 12, Part 13, Part 14, Part 15, Part 16, and Part 17.
My many component subdivision serial did non evidence that the accounts are fraudulent. It did nevertheless demonstrate some peculiar things - for instance the companionship purchased many seemingly unrelated businesses registered inwards the British Virgin Islands where all of those businesses somehow had the same address at the same lawyers office. Moreover inwards at to the lowest degree 1 instance they closed on the purchase of a concern (by purchasing its asset company) earlier that asset companionship was fifty-fifty registered.
Here is the rub. Either this bargain is existent as well as only very slow or this bargain is a consummate present pony whereby insiders are dumping huge amounts of their shares - shares valued on a multiple of turn a profit from highly peculiar accounts.
In 1 instance the stock should conk to $27 - the take-out price. In the other instance the stock should conk to unmarried digits (possibly zero) because it is a show-pony dressed upwardly to extract monies from Western investors.
83 days since the latest news, 94 days since the annunciation of the deal. Remember that.
The "Fourth Estate" has non been silent
Progress of this bargain is newsworthy. This is the largest leveraged buyout bargain always inwards mainland People's Republic of China - a watershed for the Chinese soul equity business. And the media loathe a vacuum.
There direct maintain been 2 fundamental intelligence stories since the bargain was announced. Each has acted to back upwardly the stock.
The showtime even out was inwards Basis Point (an manufacture magazine) as well as said that Merrill Lynch, Deutsche Bank as well as UBS were going to assist finance the Focus Media deal. That even out was sourced to "two people familiar alongside the transaction". In other words anonymous sources.
Those banks were to move joining the 3 master copy banks on the bargain (Credit Suisse as well as DBS). Again sourced to "the people".
These anonymous people were real specific: "the half-dozen banks excogitation to render a total of $1.65 billion inwards financing, made upwardly of a cash twain loan, a long-term loan as well as a high-yield bond".
The Wall Street Journal even out was dated 2 November. One of the Ho/Steger anonymous sources said "the banks volition sign the formal financing documents side yesteryear side calendar week at the earliest".
Needless to say that has non happened either.
Has the Wall Street Journal been played?
Good anonymous sources are component subdivision of journalism - but whatever journalist should ensure that they are non existence played alongside self-interested falsehoods yesteryear these sources.
It looks awful similar Basis Point were played. They published the financing was probable to move finalised inwards "two to 3 weeks" as well as it is straightaway 2 months. The data could direct maintain been proficient as well as the timetable slipped - but every bit at that spot was no follow upwardly from Basis Point it is probable the data was apartment false.
It is also possible that Ho & Steger (and the WSJ) direct maintain been played every bit well. It might be truthful that Merrills, Deutche as well as UBS direct maintain all joined forces to closed this bargain (in which illustration the Wall Street Journal has a story). But if non the even out is a journalist's train-wreck - as well as should cast into incertitude all the operate yesteryear these fine journalists.
I started writing what I idea a journalist should create alongside an anonymous source when the source has been lied to them - but at that spot are people far to a greater extent than versed inwards journalist ethics than me. But forget the ethical number - this is for fiscal newspapers a concern issue.
The fiscal press is the solely component subdivision of the impress media that has managed to flora pay-walls to a greater extent than or less their content. And for proficient argue likewise - reading the fiscal press is most making coin as well as y'all tin justify paying for that.
But when gullible journalists are played as well as then acting on data inwards the fiscal press becomes a manner to lose money. And what is the indicate inwards paying for that?
John
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