Monthly Archives: May 2017

Donald Trump Said Saudi Arabia Was Behind 9/11. Now He’s Going There on His First Foreign Trip. – The Intercept

Posted: May 18, 2017 at 3:04 pm

Does Donald Trumphave even an ounce of shame?

As a presidential candidate, he spent much of the election campaign needling, critiquing, denouncing, and even threatening the Kingdom of Saudi Arabia. Yet as president, he is making his first foreign visit this weekend to the Kingdom of Saudi Arabia.

Even by Trumpian standards, the volte-face is brazen. In his first few months in power, we have witnessed the trademark Trump Turnabout on issues ranging from NATO to China to the Export-Import Bank. We have listened to him go from praising Bashar al-Assad and rebuking Janet Yellen on the campaign trail, to praising Yellen and rebuking Assad in office. Last October, he saidthat then-FBI DirectorJames Comey had guts for doing the right thing; last week, he sacked Comey and called him a showboat and a grandstander.

Trump, to put it mildly, is no stranger to the shameless U-turn. Still, the Trump Turnabout on Saudi Arabia one of Americas closest allies since President Franklin D. Roosevelt met with King Abdul Aziz ibn Saud aboard the USS Murphy in 1945 is a true sight to behold. This weekend, Trump will arrive in Saudi Arabia for a bilateral summit with King Salman as well as a series of meetings with members of the Gulf Cooperation Council.

There will be handshakes, hugs, and smiles galore. We will be expected to forget how Trump blasted the Saudi royals for being freeloaders and threatened them with an economic boycott. Speaking to the New York Times last year, Trump claimed that, without U.S. support and protection, Saudi Arabia wouldnt exist for very long. The real problem, he continued, was that the Saudis are a money machine and yet they dont reimburse us the way we should be reimbursed. Asked if he would be willing to stop buying oil from the Saudis if they refused to pull their weight, Trump responded: Oh yeah, sure. I would do that.

We will be also expected to ignore the fact that Trump slammed the Saudi government for executing homosexuals and treating women horribly. In the third presidential debate last October, Trump attacked Hillary Clinton for taking $25 million from the Saudis, from people that push gays off buildings. These are people that kill women and treat women horribly and yet you take their money.

Perhaps above all else, we will be expected to brush under the carpet the fact that, twice in a single day, Trump accused Saudi Arabia of being behind the 9/11 attacks. Who blew up the World Trade Center? Trump asked his pals at Fox and Friends on the morning of February 17, 2016. It wasnt the Iraqis, it was Saudi take a look at Saudi Arabia, open the documents.

At a campaign event in South Carolina later that day, he again cited secret papers that could prove it was the Saudis who were in fact responsible for the attacks on 9/11. It wasnt the Iraqis that knocked down the World Trade Center because they have papers in there that are very secret, you may find its the Saudis, OK?

(To be fair to Trump, far more credible and better-informed figures have come to a similar conclusion: I am convinced that there was a direct line between at least some of the terrorists who carried out the September 11 attacks and the government of Saudi Arabia, wrote former Florida Sen.Bob Graham, who co-chaired the Senate intelligence committees inquiry into 9/11, in an affidavit in 2012.)

Donald Trump walks from a campaign stop Feb. 17, 2016, in Bluffton, S.C. At the event, he cited secret papers that could prove it was the Saudis who were responsible for the attacks on 9/11.

Photo: Matt Rourke/AP

Whether or not the Saudi government played a role in the 9/11 attacks and we may never know for a leading U.S. presidential candidate to claim that they did, not once but twice, had to be seen to be believed. And yet, astonishingly, a little over a year later, it is to the Kingdom of Saudi Arabia that Trump has chosen to make his maiden foreign voyage rather than to Canada or Mexico, as every president since Ronald Reagan has.

Will Trump return from his Saudi jaunt with a big fat check? His much-hyped reimbursement? Will he dare raise the issue of gay rights while in Riyadh? Or womens rights? Will he manage to bring back a Saudi royal or two in handcuffs for their (alleged) role in the 9/11 attacks?Please. There are greater odds of the American president coming back as a proud convert to Islam.

Hypocrisy is not the exclusive preserve of Trump or the United States, of course. Saudi Arabia sees itself as the the birthplace of Islam, ruled by a king who styles himself custodian of the two holy mosques. Yet this coming weekend, the Saudi government will offer a warm and lavish welcome to a president who has said Islam hates us and wanted to ban all of the worlds 1.6 billion Muslims from entering the United States. The Saudi position on the latest iteration of the Trump travel ban, targeted at 170 million-odd Muslims? A sovereign decision aimed, apparently, at preventing terrorists from entering the United States of America and made by a true friend of Muslims.

On Sunday, the fawning Saudis will offer a platform to the worlds most famous Islamophobe, to give a speech on Islam in the birthplace of Islam. AndTrump will likely take the opportunity to decry radical Islamic terrorism while visiting a country thathas perhaps done more than any other to incite, fund, and fuel it.

Hypocrisy unites them both. So too does their fear and loathing of the Iranians the Saudis are busying dropping bombs and backing militants to push back Iranian influence in Yemen and Syria. The Trump administration, filled with Iran hawks, is on the verge of inking a series of arms deals with Riyadh worth more than $100 billion.

To be clear: Trumps U-turn on Saudi Arabia has little to do with being moderated by the realities of high office or swayed by the Beltways foreign policy elites. Despite his bombastic campaign rhetoric, he never planned to go after the Saudis in office even after publicly accusing them of murdering 3,000 Americans. Early on in the campaign, in 2015, a senior Arab diplomat told me, on condition of anonymity, that Trump had informed most of the Gulf governments, in private, that his anti-Muslim and anti-Arab rhetoric was all for the campaign and that it would be business as usual once he was elected (or, for that matter, defeated).

As ever, for Trump, it is always, above all else, about the bottom line his bottom line. The Saudi-bashing Trump sold an entire floor of the Trump World Tower to the Saudis for $4.5 million in 2001. And would it surprise you to discover that Trump also registered eight companies tied to hotel interests in Saudi Arabia inthe midst of his Saudi-bashing presidential campaign?

Of course not. Business is business. Trump is Trump. You might be repulsed by his deceitfulness but you have to admire his chutzpah.

Top photo: A view aboard an American warship at Great Bitter Lake, Egypt, when President Franklin D. Roosevelt conferred with King Ibn Saud of Saudi Arabia in 1945.

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Stephen Colbert Uses ‘Let It Go’ From ‘Frozen’ To Mock Donald Trump – HuffPost

Posted: at 3:04 pm

YouTube is host to so, so many Donald Trump parody videos of Let It Go from the 2013 Disney movie, Frozen. Having not watched all of them, most are still assuredly terrible in that way jokes that fully rely on a trending topic plus other random trending topic construction tend to be.

But Stephen Colbert still found a way to make a Let It Go Donald Trump joke work on The Late Show last night.

Colbert focused part of his monologue on The New York Times revelation that former FBI Director James Comey kept notes of a private meeting Trump had with him in the Oval Office.

During their conversation, Trump reportedly said, I hope you can let this go, referring to Comeys investigation of Trumps former National Security Advisor Michael Flynn. Flynn is one of several Trump associates under FBI investigation over potential ties to Russia, hence implying that Trump has, in fact, tried to affect the FBIs investigation into his possible collusion with Russia.

Jumping on the, I hope you can let this go, quote, Colbert spun the phrase in a way you can now probably predict.

Trump told Comey repeatedly to let it go, said Colbert. He even got Ivanka to help.

The show then aired footage of Queen Elsa from Frozen singing the popular song.

When the camera went back to Colbert, the comedian continued, So beautiful. So beautiful. Talented. Lovely. I hear if she wasnt a cartoon, hed date her.

Colberts usage of the Frozen tie here ends up working despite the well-tread (icy?) waters of the joke.

Perhaps the world didnt need yet another live rendition of the song, but Colberts singing talent probably could have carried the joke another step if hed decided to sing a few lines himself.

Trump also has a strange history with the movie Frozen.

When still a candidate, he was accused of racism for tweeting a photo that originated on a white supremacist website of what appeared to be the Star of David alongside an accusation that Hillary Clinton was corrupt, all in front piles of cash. Trump said the image wasnt anti-Semitic, then found a picture of Frozen merchandise that used a similar six-pointed star to the one he originally tweeted.

Where is the outrage for this Disney book? Is this the Star of David also? Dishonest media! #Frozen, Trump wrote.

It was a beautiful tweet, especially for the use of #Frozen. The mental image of Donald Trump typing #Frozenat the end of a statement claiming hes not racist is just ... yes.

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How Trump learned about the special prosecutor – Politico

Posted: at 3:04 pm

A battalion of White House aides entered the Oval Office together to present a unified front after the bombshell.

The Justice Department had appointed a special prosecutor to oversee the probe into Russia's alleged involvement in the 2016 presidential election, White House counsel Don McGahn had just told President Donald Trump. Many of Trumps top aides gathered with the president Wednesday evening just after Deputy Attorney General Rod Rosenstein signed the order and called McGahn and just before the news exploded publicly in Washington.

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Trump handled it better than anyone expected, according to a person in the room. His reaction was extremely measured, another said.

He didn't yell or scream. He told the assembled crowd they had nothing to hide.

But that levelheadedness was quickly replaced Thursday morning by a wounded tweeter in chief lashing out as some of his staffers had been expecting the news would bring out.

With all of the illegal acts that took place in the Clinton campaign & Obama Administration, there was never a special councel appointed! Trump tweeted, after an unusually quiet 24 hours online.

He added in a second tweet: This is the single greatest witch hunt of a politician in American history!

The change in attitude followed a typical pattern with Trump: accepting a defeat in real time, then later raging against it after talking to friends and watching television. After his first attempt at repealing and replacing Obamacare failed, he was calm and conciliatory, then later began blasting the House Freedom Caucus from his online pulpit.

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True to form, Thursdays screed was a stark contrast to the response Wednesday night in the Oval Office, according to aides present, where the mood in the room appeared to be one of resigned acceptance even though they were blindsided. Everyone knew this wasn't good news," this person said.

The announcement marked yet another severe blow to the 45th president just 118 days into his term. It followed eight days of chaos inside the White House after the president suddenly fired FBI Director James Comey, further crippling an administration already struggling with internal discord and mounting crises at home and abroad.

The president Wednesday afternoon had been interviewing candidates for FBI director when the news arrived. His staff had no advance notice that a special prosecutor would be appointed.

The crowd entering Trumps office was sizable, as is often the case: chief of staff Reince Priebus, McGahn and other lawyers, senior advisers Kellyanne Conway and Jared Kushner, communications aides Michael Dubke and Hope Hicks and others.

Aides outlined the background of the special counsel, former FBI Director Robert Mueller, who Trump had met before. Some explained to the president what a special prosecutor can do.

Over the course of about 40 minutes, aides streamed in and out of the Oval Office. The team drafted a statement from the president for Trumps approval. A gaggle of reporters camped outside press secretary Sean Spicers office to wait for it.

It was released Wednesday at about 7:20 p.m., 80 minutes after the Justice Departments public announcement and two hours after staff first got word of the action.

As I have stated many times, a thorough investigation will confirm what we already know there was no collusion between my campaign and any foreign entity, Trump said in the statement. I look forward to this matter concluding quickly. In the meantime, I will never stop fighting for the people and the issues that matter most to the future of our country.

Priebus and Trump together delivered a rally-the-troops message to the team: This is an opportunity to let them do their work so we can do ours, Priebus and Trump both reiterated multiple times to the aides gathered.

Outside the White House grounds, the news would soon be interpreted as a potential step that could drain the presidency for months to come.

Trump's upbeat response surprised some aides, though it brought the team together in the face of a common outside threat, according to a source who was present Wednesday.

No one really thinks having a special prosecutor is good and no one is happy" about it, a senior administration official said.

But the communications staff agreed on a positive message for the wrenching news: Because of the special prosecutor, the brewing Russia-related controversies would become something that we just can't talk about, one aide said.

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In the communications office, which has suffered some of the most brutal criticism internally from Trump, the feeling was the special counsel would be a burden off its shoulders.

In the weeks leading up to the decision to appoint a special counsel, Spicer and deputy press secretary Sarah Huckabee Sanders both publicly said there was no need for the step Rosenstein finally took Wednesday.

Now, Spicer and other briefers would no longer have to look as if they were stonewalling on Russia questions, and could refer those elsewhere.

Aides are now urging Trump to tweet and speak cautiously. "I think he actually understands what a mess this is," one person said. "He has lawyers telling him nonstop what the stakes are here."

On Thursday, Trump was to meet at the White House with the president of Colombia and participate in a joint news conference in the afternoon.

He'll depart Friday for his first international trip as president: an eight-day, five-country journey from Saudi Arabia to Israel to the Vatican to Brussels to Sicily, where he is attempting to shift the narrative away from his domestic crises.

One of the things Trump is most looking forward to about his upcoming trip, according to a White House aide, is a reprieve from the daily press briefings.

On Wednesday night, a person close to him said, Trump was in the White House residence talking to friends and associates about how it was playing on TV.

Josh Gerstein contributed to this report.

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KING: Donald Trump has reached peak white privilege – New York Daily News

Posted: at 3:04 pm

NEW YORK DAILY NEWS

Thursday, May 18, 2017, 1:08 PM

Donald Trump exudes white privilege. Without it, he wouldn't be President of the United States. No black man in America could ever have said and done the things he has said and done (don't make me list them ) without an advanced degree or a single day of elected experience no less, and rise to the highest office in the land. Never! That's an exclusively white male opportunity.

White privilege seeps out of the very pores of this administration. It's how Betsy DeVos could become secretary of education without a single day of experience teaching in a classroom or managing a school. Most of her predecessors had at least done one of those things many even managed entire school districts with thousands of students. Like Trump, she has no advanced degree, but that was no impediment for her. Wealth and white privilege paved her way.

Donald Trump reached peak white privilege this week. With his political world caving in all around him, with talks of his impeachment or resignation growing, and whispers of conservatives hoping Vice President Pence can somehow take his place, Trump has started a national pity party for himself. In doing so, he has not only exposed just how deep his rabbit hole of white privilege goes, but also just how little history he truly understands.

First, sulking aloud while he was supposed to be giving a commencement speech to Coast Guard graduates, Trump said of himself "no politician in history, and I say this with great surety, has been treated worse, or more unfairly."

KING: Calls for Trump's impeachment grow louder, minute by minute

This has to be one of the most outrageous, offensive, and ridiculous statements I've ever heard from a national leader.

34 photos view gallery

First off, we live in a nation where we've seen former presidents including Lincoln and Kennedy shot and killed while in office. Robert Kennedy, while running for President, was also shot and killed. Trump was actually 22 years old when RFK was assassinated, but it appears that he either forgot it even happened or that he actually believes what is happening with him right now is worse than being assassinated.

Is Donald Trump unaware that Nelson Mandela spent 27 years incarcerated as a political prisoner in apartheid South Africa? The bulk of those years were spent in painful isolation on Robben Island, far away from his own wife, children and community. Mandela, mind you, was not on that island alone, but with dozens of other political prisoners from throughout South Africa. Does Trump actually believe that what he is experiencing is worse than this?

In fact, so many brilliant African politicians, from Patrice Lumumba to Kwame Nkrumah, were executed and exiled for taking a stand against colonialism. I sincerely doubt, though, that Donald Trump has ever even uttered those names before or could pick their faces out of a lineup.

Trump complains of witch hunt Russia probe in paranoid tweets

Trump continued his self-pity party Thursday when he tweeted that what he is experiencing right now is "the single greatest witch hunt of a politician in American history."

Really? That he could even form his fingers to tweet such foolishness is disgusting. Mind you, Donald Trump himself said he hired private investigators to attempt to prove that President Barack Obama was not even an American. Trump was perhaps the most visible "birther" in the entire nation continually questioning the citizenship and humanity of Obama every chance he got.

That Trump now thinks he is experiencing the worst witch hunt in American history, or the worst political attacks in world history, shows just how painfully delusional he actually is.

Trump made his outrageous claims with "surety" so let me say what I'm about to say with surety. Donald Trump's narcissistic assessment of how bad things are for him right now is not just strange, it's disturbing. I honestly believe it's a sign that something is painfully wrong with this man to be able to make such a skewed assessment. He does not have his feet or mind grounded in reality. He lacks the basic knowledge or context to even understand the common facts of American or world history.

Trump campaign members had 18 undisclosed talks with Russia

I've said it before, but I'll say it again none of this is surprising. This is exactly who Donald Trump has always been except now he's a terrible human being in the most important office in the world.

God help us.

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The biggest lesson of Puerto Rico’s bankruptcy – CNN

Posted: at 3:04 pm

Here's an idea of the out-of-control big-government policies that have brought about financial ruin in Puerto Rico: Public employees get 30 vacation days a year, the minimum wage is 77% of the median wage, and bondholders suffer for the benefit of big labor. Puerto Rico's Democratic delegate Pedro Pierluisi admitted to Congress that, "Part of this overspending is definitely the result of mismanagement. I admit it. And it's embarrassing." Keep in mind, Puerto Rico is a US territory, and if this debt-fueled nightmare can happen there, it can happen in any state across the country.

Ultimately, the commonwealth needs economic growth. However, to have access to the credit it needs to rebuild, Puerto Rico needs a comprehensive, common sense, and transparent restructuring and repayment plan that is best achieved through negotiations with creditors. Title III proceedings could last for years and will delay any chance at economic recovery Puerto Rico can have. The best outcome is a court-driven restructuring process to protect creditors' rights and maintain essential services for residents.

Rosello found himself not only facing economic collapse, but also facing lawsuits from creditors. Instead of taking responsibility and finding a viable solution to pay off the debt, the governor sought Title III bankruptcy protection.

What happened in Puerto Rico is what happens when leaders make and defend poor policy decisions for decades; eventually you have to pay the tab for unchecked borrowing and spending. In addition, the bloated government workforce has been a disaster for the economy of Puerto Rico and investors are left holding the bag.

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South Bay man sentenced to 56 months for bankruptcy fraud – The Mercury News

Posted: at 3:04 pm

SAN FRANCISCO A South Bay entrepreneur was sentenced Wednesday to more than 4 years in prison after pleading guilty to concealing a bank account during a 2010 bankruptcy proceeding, authorities said.

In 2010, the 68-year-old Morgan Hill resident sought relief for $1.5 million in debts through U.S. Bankruptcy Court.

However, prosecutors said McVay knowingly signed documents concealing two bank accounts, including one in his wifes name but under his exclusive control, totaling more than $45,000.

A federal grand jury indicted McVay in April 2016 and charged him with two counts of concealing assets in bankruptcy and one count of presenting false testimony in bankruptcy proceedings.

In exchange for him pleading guilty to the first count of concealment, the rest of the charges were dismissed.

U.S. District Judge Lucy H. Koh sentenced McVay to 56 months in prison and three years of supervised release. A restitution hearing also was set for June 14. He is scheduled to begin serving his sentence June 28.

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GulfMark Offshore to file for bankruptcy – WorkBoat (blog)

Posted: at 3:04 pm

On Tuesday,GulfMark Offshore Inc. announced that it had signed an agreementon a financial restructuring that will be implemented through a voluntary Chapter 11 bankruptcy filing.

The Houston-based offshore service vessel operator said the restructuring will strengthen the companys competitive and financial position. Holders of approximately 47% of GulfMarks unsecured 6.375% senior notes due 2022 have signed a restructuring support agreement (RSA).

Under the terms of the RSA, GulfMark will convert its outstanding senior notes to 35.65% of the equity in a reorganized GulfMark, resulting in the elimination of approximately $430 million in outstanding debt and approximately $27 million in annual interest payments. The company will also launch a $125 million rights offering to holders of its senior notes for an additional 60% of the equity in a reorganized GulfMark, providing liquidity to fund its operations. The $125 million rights offering will be backstopped by certain holders of the senior notes. Existing shareholders will receive 0.75% of the equity as well as warrants for an additional 7.5% of the equity in the reorganized GulfMark. The warrants will have a seven-year term and an exercise price based on a reorganized overall equity value of $1 billion.

The restructuring will be implemented through thebankruptcy filing on or before May 21, 2017. GulfMarkwill continue its operations throughout the process. The company has entered into a commitment letter, subject to certain conditions including execution of definitive documentation, for financing to support its operations during the process.

The restructuring will enhance our competitive position when contracting with customers and vendors, and it will substantially strengthen our capital structure and liquidity, Quintin Kneen, president and CEO, said in a statement.While the industry conditions remain challenging, this debt reduction and rights offering will significantly enhance GulfMarks financial position.

Kneen stated that therestructuring enables the company to continue to meet its ongoing obligations to all customers, employees, and vendors. We are confident that this step will position GulfMark to seize opportunities as the downturn continues and in the eventual market recovery, he said.

GulfMark has retained Weil, Gotshal & Manges LLP as legal counsel and Alvarez & Marsal North America LLC and Evercore Group LLC as financial advisors.

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Bankruptcy Should Be A Last Resort For Struggling Hartford, Conn … – Seeking Alpha

Posted: at 3:04 pm

Last Tuesday, the Mayor of Hartford, Conn., Luke Bronin, announced that he has had initial conversations with attorneys who specialize in Chapter 9, municipal bankruptcy. The move was a surprise to the municipal bond market as well as other members of the Hartford city board who were unaware of the mayor's intentions, and many called the move premature.

For quite some time, it has been publicly known that Hartford is facing financial troubles. In October 2016, Moody's downgraded Hartford's general obligation debt to Ba2 in citing the city's inability to run a balanced budget, tax increase constraints as well as limited likelihood that the state of Connecticut will step in to assist them, given the state's in fiscal straits. In fiscal year 2017, they are facing a $14 million deficit and expect to face an even greater $65 million deficit in fiscal year 2018. With all this news, and in an effort to be transparent, as recently as April of this year the mayor has said that bankruptcy was not off the table.

Transparency was not the mayor's misstep. The wrong move he made was jumping to a last resort while skipping other meaningful steps along the way. In these seemingly bankruptcy-happy times that we are living in, Hartford appears to have jumped the gun. Bankruptcy should be the final play for a struggling municipality after all other options have been exhausted. This was something that the Mayor of Hartford understood back in June 2016 when he said bankruptcy was on the bottom of a list of solutions the city is pursuing. As other Hartford council members have expressed, Hartford has not exhausted all of the options - they have not even attempted to implement all of their available options. So by doing what the Mayor believes is prudent, the city has essentially poisoned their own well.

Bankruptcy is a very drastic measure that cannot and should not be entered into easily. In the state of Connecticut, if a city wishes to file for Chapter 9, they must first prove to the state that they are truly insolvent. This is something that Bridgeport, Conn., was unable to do when they sought protection in 1991. Since there are many steps between now and a potential use of bankruptcy protection, the mayor has created many problems for the city by having initial conversations with council at such an early stage in their predicament. The effects will ripple across the Hartford economy in ways many people wouldn't realize.

The cloud of bankruptcy casts such negative publicity that people will immediately associate the city with notable distressed municipalities such as Detroit and Atlantic City. Readers should note that Detroit filed for Chapter 9 bankruptcy in 2013, while Atlantic City was taken over by the State of New Jersey. This, in turn, discourages development and further investment in a city until it can be proven that meaningful corrections have been made.

Another, less publicized effect is the increase in borrowing cost. Borrowing costs are defined by Business Dictionary as "the total charge for taking on a debt obligation." When a city borrows public funds for an infrastructure project or to build a school, there is a borrowing cost associated with those funds in terms of an interest rate paid to borrow the money. Simply mentioning bankruptcy seriously affects a city's borrowing costs, and we can use Hartford as a real-time example of how this works.

On Monday, May 8, Hartford general obligation bonds with an approximate maturity of 15 years out were changing hands at well below a 5% yield. What that translates to is that the city could borrow pubic money at below 5%. The very next day, after the mayor said he had initial conversations with bankruptcy specialists, Hartford G.O. bonds were trading at a yield around 7%. Checking the market trades on EMMA shows the dramatic move.

So, what does that mean? The yield level that Hartford's outstanding debt trades at in the secondary market reflects where they would/should be able to borrow more money at that time.

You see, by mentioning Chapter 9 in such a serious way, Hartford's cost of capital went up 40%. By jumping to bankruptcy prematurely, the mayor could cost the people of Hartford a lot of money, should they need to borrow money in the near term. Bondholders have already suffered a price decrease in their bond holdings, and if a bankruptcy is announced, it would be quite likely that the bonds' value could suffer further.

Maybe Hartford and Connecticut will work out of this problem. Maybe they will not and seeking bankruptcy will be their only option - only time will tell. One thing is for certain: By bringing up bankruptcy before it is absolutely necessary, Hartford has dramatically increased their borrowing costs, and it will take a long time to build back the public trust necessary to lower those costs again.

Disclaimer: NatAlliance Securities LLC may hold a position in Hartford Connecticut GO bonds, and in the future may be a buyer or a seller of the securities. This is not a recommendation to buy, sell, or hold the securities. Las Olas Wealth Management is a wealth management group within NatAlliance Securities LLC.

Disclosure: I am/we are long HARTFORD, CT, BONDS.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Frontier Communications: Bankruptcy Looms In 2020 – Seeking Alpha

Posted: at 3:04 pm

This year, Frontier Communications (FTR) stock has lost 62% of its value. The decline is attributed to the companys huge debt, its acquisition of the CTF assets from Verizon (VZ), its dividend issues, and growth prospects in its operating segments.

In the past two months, I have written about the company and its need to cut or eliminate its dividend. Early this month, the company announced a 62% dividend cut that will see it save $300 million this year and $400 million in 2018.

In this article, I will explain the reasons I believe that Frontier will declare bankruptcy in either 2020 or 2021.

In the past five years, Frontier invested $24.2 billion in capital expenditure. The company used this money for acquisitions and infrastructure upgrade. In 2014, it paid $2.2 billion for wireline assets from AT&T (T). The following year, it spent $11 billion to acquire Verizons (VZ) operations in California, Florida, and Texas (CTF).

In that period, it issued debts of about $12.5 billion. This money was used to pay existing debts, pay dividends, and fund the acquisitions. Unfortunately, these acquisitions are not working. In some cases, it has lost customers as a result of the acquisitions.

In total, Frontier has more than $17.5 billion in debt and $371 million in cash at hand. As I will explain below, the company will not be able to honor its covenants past 2020.

To better explain this, I will first look at how the company makes money. Its source of income are data and internet services, voice, and video services. In voice, the company provides data-based VoIP, long distance and voice messaging services, to residential and business customers. This segment has been declining as more people and businesses turned to wireless communications. In the video segment, the company provides television services through its Vantage brand and its partnership with DISH (DISH). This segment has also been declining as more people move to newer forms of watching TV. In the past two decades, the data and internet services segment has grown as more people started using the internet. However, this segment will not provide much growth in future since most people and businesses are already connected to the internet.

Back to the debt. The companys long-term debt maturities are shown in the chart below.

Source: FTR

In 2018 and 2019, the company will be required to pay more than $1.5 billion. The company can comfortably pay this amount as the management said in the recent earnings call:

We have relatively low debt maturities over the next two years, with $733 million due 2018, the majority of which is in Q4 2018 and $818 million due 2019. We intend to issue secured debt in the second quarter of 2017, subject to market conditions, and we will use the proceeds, existing liquidity, ongoing cash flow from operations, and the increased cash on hand from the reduction of the dividend to accelerate deleveraging, reduce interest expense, and increase free cash flow.

The company will hit a wall in 2020 when it will be expected to pay $2.4 billion. In 2021 and 2022, it will be required to pay $2.5 billion and $2.6 billion respectively. The figures are much higher when you include the interest and other obligations which are shown below.

Source: FTR 10-K

In 2016, the company had revenues of $8.86 billion and a net loss of $262 million. This means that even if it manages to increase its revenues and reducing its expenses, it will not have enough runway to generate cash to service the debt past 2020.

At that time, it will either issue debt or sell assets. The first option will be difficult because of its current debt and the weakness of its operating segments. In November last year, Moodys downgraded FTR to B1 rating. In March, it reaffirmed this rating. This means that it will be difficult for FTR to raise more debt. Asset sales will not be a viable option either. In 2020, it will be difficult for the company to sell its wireline business which will be obsolete within a short period.

Early this month, the company announced that it would reduce its dividend. This is an action I have called for in my past articles. The company expects to save about $1.5 billion. However, this action will not be enough in the long-term.

Bottom-line

Frontier operates in an industry that is changing very fast. Its video services are being disrupted by streaming services offered by Netflix, Hulu, and YouTube. Its voice services have been overtaken by wireless mediums while its data and internet services have limited room for growth. The company can afford to pay its near-term debt maturities. However, in 2020, 2021, and 2022, the company will be required to pay more than $7.5 billion an amount it might not manage to raise. At that time, I believe the company might be forced to file for bankruptcy.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Frontier Communications: Bankruptcy Looms In 2020 - Seeking Alpha

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N.C. questions Duke Energy’s plans following Westinghouse bankruptcy – Charlotte Observer

Posted: at 3:04 pm


Charlotte Observer
N.C. questions Duke Energy's plans following Westinghouse bankruptcy
Charlotte Observer
Add Duke Energy Corp. to the list of U.S. utility owners affected by the bankruptcy of nuclear contractor Westinghouse Electric Co. The North Carolina Utilities Commission ordered Charlotte-based Duke this week to report on the financial status of ...
Westinghouse inches closer to rejecting construction contracts in ...Pittsburgh Post-Gazette

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N.C. questions Duke Energy's plans following Westinghouse bankruptcy - Charlotte Observer

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