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#22
10-07-2006, 02:06 PM
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Re: Barrons: Only the house wins
[ QUOTE ]
PartyGaming owes its clients $192.6 million in liabilities and prize pools, while having only $132.9 million in cash and cash equivalents to meet that obligation. [/ QUOTE ] I believe this statement is misleading... I'll take a look once I have some more time later this week, to figure out exactly why its misleading. Just as an example, "prize pools" may represent the total of tournament guarantees X months into the future, etc. Also, I'm fairly certain that player funds are segregated from operating capital. I would not be concerned about their ability to meet withdrawals... 
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#23
10-07-2006, 02:26 PM
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Re: Barrons: Only the house wins
As has been noted before, Party only had a credit line cancelled that didn't actually have a balance on it, which isn't the same as having a loan called. As to the quote above about liabilities, if they have any outstanding loans at all though, they don't have to have cash on hand to cover same in order to be solvent. They just couldn't necessarily pay them off right now. And they do have segreated accounts for players' money.
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#24
10-07-2006, 02:47 PM
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Re: Barrons: Only the house wins
[ QUOTE ]
Of course, the company could make good on its obligation with its retained earnings and shareholders equity [/ QUOTE ] This makes it sound like an option not to pay off their accounts payable even with positive shareholders' equity. Is anyone here an accountant/solicitor in the UK that can comment on this?
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#25
10-07-2006, 03:18 PM
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Re: Barrons: Only the house wins
Sniper, I don't think client money is off balance sheet *
That being said, unless their was a huge run all at once, they appear to be able to cover withdrawals, it would just take time to settle their receivables (depending on the terms) The Barron's article, in my estimation, was worst case and all stars aligning, etc. This could always become a self fulfilling prophescy though if there was mass panic. *Client liabilities and prize pools represent amounts due to customers including net deposits received, undrawn winnings, jackpots and tournament prize pools and certain promotional bonuses.
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#26
10-07-2006, 07:35 PM
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Re: Barrons: Only the house wins
[ QUOTE ]
Several phone inquiries by Barron's to PartyGaming on its current cash situation went unanswered [/ QUOTE ] Good to see that the turbulence of the past week hasn't impacted Party's vaunted customer service...
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#27
10-07-2006, 07:58 PM
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Re: Barrons: Only the house wins
[ QUOTE ]
[ QUOTE ] Several phone inquiries by Barron's to PartyGaming on its current cash situation went unanswered [/ QUOTE ] Good to see that the turbulence of the past week hasn't impacted Party's vaunted customer service... [/ QUOTE ] These inquiries would not be fielded by Customer Service... and the answer to any questions regarding Party's cash position could not be answered to Barron's on the phone, in any case. That sentence is clearly a case of journalistic misrepresentation, and as I've noted, I believe that article contains other misrepresentations.
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#28
10-07-2006, 10:14 PM
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Re: Barrons: Only the house wins
[ QUOTE ]
[ QUOTE ] Of course, the company could make good on its obligation with its retained earnings and shareholders equity [/ QUOTE ] This makes it sound like an option not to pay off their accounts payable even with positive shareholders' equity. [/ QUOTE ] Retained earnings and shareholder equity cannot be used to pay debts because they are just accounting numbers as opposed to real money.
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#29
10-07-2006, 10:36 PM
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Re: Barrons: Only the house wins
What I'm asking is: wouldn't PP have to declare bankruptcy for the players not to be paid? Further, wouldn't the players' claim come before any of Party's investors?
The article is implying that Party could choose to default on its players and still be worth something as a company.
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#30
10-07-2006, 10:46 PM
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Re: Barrons: Only the house wins
[ QUOTE ]
What I'm asking is: wouldn't PP have to declare bankruptcy for the players not to be paid? Further, wouldn't the players' claim come before any of Party's investors? The article is implying that Party could choose to default on its players and still be worth something as a company. [/ QUOTE ] Party is not going anywhere... and may continue to be the market leader even after restricting US players from access to real money tables... Look for Party to try and buyout some of its competition... its not going bankrupt!
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