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Fairfield's book value $7.80 per share.

Fairfield's Book Value $7.80 Per Share

Fairfield's plunge into bankruptcy court last week took the company's 10.9 million shares along with it. The stock has plunged from a high of nearly $6 last October to around $0.50 a share today.

With millions of bondholders in the wings chomping at the bit, Fairfield stockholders evidently have little hope that their company's equity is worth much at all.

As a an experiment, we decided to try and calculate what the liquidation value of the stock would be if Fairfield bites the bullet, goes into Chapter 7 and pays off all creditors.

It's not easy to tell, and we got different numbers from different sources, but here goes:

* First, Fairfield's COO John McConnell estimates the company's subsidiaries currently in bankruptcy have a net worth of $125 million. He says the resort operation's only problem is a lack of liquidity;

* Next, we added in Fairfield's other companies operating outside of bankruptcy court: its North Carolina thrift, $462-million First Federal S&L; three resorts; a life insurance entity, Imperial Life; and a supply company. We placed this group's net worth at a troubling negative $39 million;

(How come they didn't file, too? One big reason: The creditors holding these companies are working with Fairfield to help it resolve its cash woes.);

* Taken together, overall net equity looks like $86 million to us. McConnell agrees and says this is the good news. He chides daily news coverage for painting a blacker picture than the numbers warrant.

* And the good news for stockholders? Given these numbers, Fairfield's book value stock price is roughly $7.80 per share. Of an increase of 1,460 percent over current value.

The problem of course is the hovering threat Fairfield will have to unload its assets at firesale liquidation prices and all that stock will end up as corporate wallpaper.

"Liabilities aren't going to change," says a local broker of the grim possibility. "But your assets sure can change."

PHOTO : FIRESALE IN STORE?: As Fairfield battles bankruptcy court, stockholders take a beating with the stock dipping to around $0.50 per share.
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Title Annotation:StockTalk
Author:Ford, Kelly
Publication:Arkansas Business
Date:Oct 15, 1990
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