Holders of more than 1 billion shares of Bank of America stock voted against the election of two of their directors. 1.19 billion ballots were cast against Virgis Colbert, and 1.47 billion were voted against the election of Charles Rossotti. There are slightly more than 10 billion shares outstanding. About 1.6 billion shares, held by brokers, were not voted. Colbert holds five directorships: Miller, Lorillard, Stanley Black & Decker, Manitowoc, and B of A. If you have ever been to New Britain, Connecticut, you will have a lot to say about Stanley Tools. Rossotti is former commissioner of the IRS, and currently an advisor to the Carlyle Group. Perhaps voters remember how the Carlyle Group defaulted on 16.6 billion in mortgage-backed securities. Most were subprime issues owned by a British firm. Its owners include George H.W. Bush and, at one time, the Bin Laden brothers.
I think the price of Pacific Capital's common stock should provoke some attention. Although the bank recently agreed to let Gerald Ford buy 225 million shares of common stock at a price of 20 cents per share. Today, the shares are trading for over $2. Ford also agreed to buy preferred shares. Maybe the market thinks the deal won't happen. I don't see how existing shareholders can stop it, since they have already approved the issuance of new shares.
Jackson Hewitt's new deal to get an extension on its credit line with Wells Fargo has one problem: it is a subprime loan. Jackson Hewitt is going to pay LIBOR plus 11 percent on that debt. Moreover, the loan is written to capitalize interest. JTX only has to pay a portion of their interest due. Of that 11 percent plus, JTX will pay 4.5 percentage points. In all, JTX estimates that debt service will be between $20 and $22 million per year. Does that smart? Not really. Jackson Hewitt's operating income for the last four quarters is laughable. They have lost $230 million from operations. On top of that, they were only paying about $18.3 million per year in interest.