I ran across this on Reddit's /r/rollercoasters sub today, and wondered if anyone had read it or was familiar with the info. Some interesting insight on potential financial issues within the SEAS chain. Not to stir up negatives, but it does concern me about the long term fiscal viability of our beloved park if some corrections can't be made. Anyone with more knowledge than my casual reading of this want to jump in and correct if this is an article full of errors? What's Happening with SeaWorld?
Parkscope: What's happening with SeaWorld?
- Thread starter mrsdecember
- Start date
Very interesting read.
Maybe someone smarter than me can decipher but I took it as:
Blackstone set up to make money on SEAS not invest.
When SEAS decided to invest in new rides to boost income, they picked unproven attractions that ultimately didn't work on time, didn't properly promote rides, and lead to down years.
Now with down years, Blackstone needing to pay back investors, and a "fools gold" investor SEAS is struggling to come up with the payments Blackstone needs; all the meanwhile Blackstone is still making money off SEAS.
Alright, I'm going to go two ways here:
Optimistic - Merlin comes in and buys GBW & GBT off SEAS, and makes it a 5 year difference on payments. In that time they use profits from other parks to make an investment in the twin BG parks to have them making money, and meanwhile set that money up in a smart fund to make payments. When the time comes, we see a slow down of big investments in the park, instead seeing a 3-5 year period of smaller investments meant to maintain interest as opposed to build new interest.
So in the first 5 years of Merlin ownership, both parks get a new coaster, new non-coaster ride, and a new flagship show. To save money, coasters would be twins, or contracted by the same company to be similar models (Thinking CF getting Levethian and Fury in back to back years from B&M). Twin for sure non-coaster rides, but give each ride a different skin (GotG mission breakout vs Tower of Terror). Shows specialized to each park to be a night time show (I'm thinking a Euro-star like show in GBW and Tribal celebration for GBT).
The few years following can just see, new cheap flats, updates to dining, themeing, cheap things. Hopefully over time they saved enough money, that they can make enough payments early, and then a few lean years can make them ready for a big investment again.
Pessimistic -
SEAS ends up declaring bankruptcy. Instead of being told to sell, they are forced to send to auction. Merlin or one or two other companies with ties to the industry make bids; but ultimately another company like Blackstone makes the biggest bid. And because it's the bid, and they need the most money to pay whats owed, they are forced to sell. The new investment team pulls the same stuff.
Maybe someone smarter than me can decipher but I took it as:
Blackstone set up to make money on SEAS not invest.
When SEAS decided to invest in new rides to boost income, they picked unproven attractions that ultimately didn't work on time, didn't properly promote rides, and lead to down years.
Now with down years, Blackstone needing to pay back investors, and a "fools gold" investor SEAS is struggling to come up with the payments Blackstone needs; all the meanwhile Blackstone is still making money off SEAS.
Alright, I'm going to go two ways here:
Optimistic - Merlin comes in and buys GBW & GBT off SEAS, and makes it a 5 year difference on payments. In that time they use profits from other parks to make an investment in the twin BG parks to have them making money, and meanwhile set that money up in a smart fund to make payments. When the time comes, we see a slow down of big investments in the park, instead seeing a 3-5 year period of smaller investments meant to maintain interest as opposed to build new interest.
So in the first 5 years of Merlin ownership, both parks get a new coaster, new non-coaster ride, and a new flagship show. To save money, coasters would be twins, or contracted by the same company to be similar models (Thinking CF getting Levethian and Fury in back to back years from B&M). Twin for sure non-coaster rides, but give each ride a different skin (GotG mission breakout vs Tower of Terror). Shows specialized to each park to be a night time show (I'm thinking a Euro-star like show in GBW and Tribal celebration for GBT).
The few years following can just see, new cheap flats, updates to dining, themeing, cheap things. Hopefully over time they saved enough money, that they can make enough payments early, and then a few lean years can make them ready for a big investment again.
Pessimistic -
SEAS ends up declaring bankruptcy. Instead of being told to sell, they are forced to send to auction. Merlin or one or two other companies with ties to the industry make bids; but ultimately another company like Blackstone makes the biggest bid. And because it's the bid, and they need the most money to pay whats owed, they are forced to sell. The new investment team pulls the same stuff.
UPDATED
This is some very interesting incite. Sadly it confirms some of my worst predictions. I was afraid of the debt ratio and if the negative trend was accelerating. Just for giggles I ran the numbers. With a 95% confidence ratio and, for now ignoring the 2017 numbers (as they are not fully represented) by 2018 the current ratio will be well past 5 to 1 and that is without an acceleration factor. (trend line is follows the last 2 reference points rather than predict the curve based on past performance). While this sounds lazy, if you look at the plot points as a histogram rather than a line graph, the trend is actually quiet consistent. Since Mr. Conceicao was kind enough to provide the data I did show the 2017 point and it is quiet easy to visualize based of of these 4 points where the debt ratio will go. Unfortunately adding 2017 makes things worse not better. At that rate it is easy to forecast that they will cross the 5 to 1 debt ratio in quarter 1 or 2 of 2018.
FAIR WARNING MICRO and MACRO BELOW... (caffeinate before proceeding)
Compounding just this trend, The Dow dropped from a high on Fri Jan 26 at 26.6 Thousand (approx) to this past Friday of 24.2 Thousand (approx). Most of this happening in the past week. On the micro scale this adjustment has had no direct impact on Seas stock. In fact over the same 1 month time period that I looked at, while the Dow dropped and we watched our 201ks lose 2.5% Seas went the other way climbing up from $14.23 per share to $15.45 per share. What concerns me is market and consumer confidence. We run into the classic Beer / Pizza micro econ question every B, Econ, Poly Sci, or IR major talks about. Elasticity in the market. If the price of beer goes up you will buy more Pizza and vice-versa. (econ is not hard just boring, so very very boring) Now back to the macro. Consumer confidence is lower, inflation is likely higher because... well we need it. The reality of the tax cuts is... lets say uncertain, and Busch raised rates. The beer in our equation now costs more. So the question is with the consumer, who is already nervous because the market did weird things in the short term in Feb spend less and go to a movie instead of the park? This is not a answer you can generate with, "My family will!" or "I don't see fewer people!" this will takes months perhaps a whole season to suss out.
Okay if you are still with me after that twisty path through econ then lets move on. If not, I don't hate... I put myself asleep while writing it... but hey I gave y'all a spreadsheet so that's fun!
A few other things did jump out at me.
Before I have said for BGW to survive they might have to consider extreme fiscal prudence. Now it is clear that this is not a local park problem. The problem is at Seas. They have no idea what they are doing, and clearly they lack unity of purpose. They bring in people who have had success and they fail. I would suggest that rarely is success because of one CEO or President. It is because of the board they have around them and the staff they have with them.
They have to figure something out, and fast, because the clock is ticking, and banks, investors, and the IRS have one thing in common, they are all quiet jealous of their revenue streams.
I have included a PDF of the Excel worksheet I tossed together. If someone who is better at these things wants to insert it as an image that's great. I can also supply the actual xls.
mrsdecember said:
This is some very interesting incite. Sadly it confirms some of my worst predictions. I was afraid of the debt ratio and if the negative trend was accelerating. Just for giggles I ran the numbers. With a 95% confidence ratio and, for now ignoring the 2017 numbers (as they are not fully represented) by 2018 the current ratio will be well past 5 to 1 and that is without an acceleration factor. (trend line is follows the last 2 reference points rather than predict the curve based on past performance). While this sounds lazy, if you look at the plot points as a histogram rather than a line graph, the trend is actually quiet consistent. Since Mr. Conceicao was kind enough to provide the data I did show the 2017 point and it is quiet easy to visualize based of of these 4 points where the debt ratio will go. Unfortunately adding 2017 makes things worse not better. At that rate it is easy to forecast that they will cross the 5 to 1 debt ratio in quarter 1 or 2 of 2018.
FAIR WARNING MICRO and MACRO BELOW... (caffeinate before proceeding)
Compounding just this trend, The Dow dropped from a high on Fri Jan 26 at 26.6 Thousand (approx) to this past Friday of 24.2 Thousand (approx). Most of this happening in the past week. On the micro scale this adjustment has had no direct impact on Seas stock. In fact over the same 1 month time period that I looked at, while the Dow dropped and we watched our 201ks lose 2.5% Seas went the other way climbing up from $14.23 per share to $15.45 per share. What concerns me is market and consumer confidence. We run into the classic Beer / Pizza micro econ question every B, Econ, Poly Sci, or IR major talks about. Elasticity in the market. If the price of beer goes up you will buy more Pizza and vice-versa. (econ is not hard just boring, so very very boring) Now back to the macro. Consumer confidence is lower, inflation is likely higher because... well we need it. The reality of the tax cuts is... lets say uncertain, and Busch raised rates. The beer in our equation now costs more. So the question is with the consumer, who is already nervous because the market did weird things in the short term in Feb spend less and go to a movie instead of the park? This is not a answer you can generate with, "My family will!" or "I don't see fewer people!" this will takes months perhaps a whole season to suss out.
Okay if you are still with me after that twisty path through econ then lets move on. If not, I don't hate... I put myself asleep while writing it... but hey I gave y'all a spreadsheet so that's fun!
A few other things did jump out at me.
- one of the Chinese investors is in default. In a command economy I am not certain i really know what that means. I get that in Mao Zedong's new China they have a new kind of socialism with free enterprise, but it is still a command economy. To be perfectly fair to our Communist friends on the other side of the globe, in the past decade they have been mostly well behaved in terms of international finance. Well besides artificially undervaluing the Yuan, buying entire African countries, and flooding markets... So yeah, that is worrisome.
- Personally it never even occurred to me to look into Blackstone's investors. So well played. Frankly I am surprised that the information was disclosed. To the best of my knowledge this does not need to public info. But hey, I'm not a lawyer.
- Provided everything here is correct, if you had asked me to predict Seas future I would have said either dismantling or bankruptcy protection and reorganization by 2025. Now, give the debt ratio and all the other factors included a revolving management door I really don't see anything but straight bankruptcy or sell off latest 2025.
- further if you had asked be a week ago, hell 2 days ago what I thought their biggest problem was I would have told you management in terms of marketing and unity of purpose and direction. Now, I will still say management, but financials are at the top of my least followed by leadership, then in a distant 3rd place, all the rest.
Before I have said for BGW to survive they might have to consider extreme fiscal prudence. Now it is clear that this is not a local park problem. The problem is at Seas. They have no idea what they are doing, and clearly they lack unity of purpose. They bring in people who have had success and they fail. I would suggest that rarely is success because of one CEO or President. It is because of the board they have around them and the staff they have with them.
They have to figure something out, and fast, because the clock is ticking, and banks, investors, and the IRS have one thing in common, they are all quiet jealous of their revenue streams.
I have included a PDF of the Excel worksheet I tossed together. If someone who is better at these things wants to insert it as an image that's great. I can also supply the actual xls.
This is always hard to hear especially about a place like BGW that we all have an emotional attachment, but Blackstone is not an amusement company, they are an investment company. In other industries, other companies do similar things. I can use DoD contracting as an example and more specifically SRA international, CSC and Providence Equity, mostly because I was there for some of it. SRA was a midsize DoD, Medical, Federal, and State level contractor. By 2011 / 2012 timeframe the DoD was becoming less profitable and the owner wanted to retire. Enter Providence equity. They bought out the company, Sold off the debt, payed off the owners with the enormous cash reserves, and proceeded to tighten the belt and re-organize. (this is about when I left) What happened next is normal. They spun off DoD to merge with another company called CSC and they became what is now CSRA. The other more profitable divisions went elsewhere, but in all cases they cut out what they did not, making the root more valuable and then better for sell of and finally pay off for their investors.warfelg said:
They were not contractors any more than Blackstone was an entertainment group. Seas was just an investment to be tuned and turned over. This optimized what you all have heard be say about corporate finance time and again. The purpose is to maximize shareholder wealth.
What I do find interesting is that Blackstone seemed to understand something that Seas does not, you need to invest in your product to make it as pretty as the rest of the girls at the dance.
I think it might be a bit early to decide that Merlin is going to buy Seas or the Busch parks. There are many competing factors, not the least is that they do not want aquatic animals and Seas has said they are not interested in breaking up the band.
Frankly while I hope it isn't I think the later is the most likely, they are going to need a real wake up call.
Hands down single biggest negative item is when Blackstone came in to buy Seaworld, not withstanding AB selling itself to InBev which set the whole thing in motion and the gullible people who fell for Blackfish. Like the article stated, Blackstone bought the company on debt, saddled SEAS with $1.6 billion of debt, and then sucked them dry with the IPO and the dividends so they could make a nice profit.
The earliest SEC filing I could find was one from early 2013 that listed the company as having just over $1.8B in debt at the end of 2012. It's now only down to just over $1.5B. So it's only gone down by $300 mil in basically five years. Not good. With their finances the way they are there's only so many times that banks are going to allow then to refinance it. And now with rates starting to go up this doesn't bode well for doing it again.
I really hope management gets things figured out and gets this turned around. I'd hate to see them have to file for Chapter 11 reorganization bankruptcy. But it would be one way to get rid of a lot, if not all of that debt.
The earliest SEC filing I could find was one from early 2013 that listed the company as having just over $1.8B in debt at the end of 2012. It's now only down to just over $1.5B. So it's only gone down by $300 mil in basically five years. Not good. With their finances the way they are there's only so many times that banks are going to allow then to refinance it. And now with rates starting to go up this doesn't bode well for doing it again.
I really hope management gets things figured out and gets this turned around. I'd hate to see them have to file for Chapter 11 reorganization bankruptcy. But it would be one way to get rid of a lot, if not all of that debt.
Zimmy said:
I'm not going to pretend I'm smart enough to understand that first bit haha.
As for this bit: I used Merlin because they've sniffed around and showed interest in the past. Of course there are other entertainment companies that could show interest in them. Never know. I get that SEAS say's they have little interest in splitting up, but, there's always the godfather offers, and if it's something that takes care of their debt and gives them a chance of operating in the black....I don't see how they say no.
Yea....I agree the latter is the most likely, because it's hard to convince someone to pay top dollar when they know it could be auctioned off soon.
If I'm really honest:
I would love a white knight to come in last minute and save the BG twins. Either InBev deciding they made a grave mistake, Merlin, HERC, Herschend....just someone that cares about themeing and less about bottom line (not that I want them operating in the red though).
I would like to argue with you on this point at least in theory, but history says you are correct. This is a good textbook example of when the private equity is not the best thing for a product. In theory it brings more corporate responsibility and discipline. Certainly without AB bankrolling their every whim the parks needed that, but it fails to understand the product itself which inherently requires a bit more understanding of the devoted clientele.Alf33 said:
As was mentioned in the article, debt is not necessarily bad. In fact debt can be a good thing, it could for example represent outstanding loans on new infrastructure or other massive capital outlay. So while 1.8B and 1.5B are big numbers you have to look at them in relation to their assets, rev., and of course to whom the debt it owed. So if Amazon has 1.8b in debt that is no beg deal, the ratio is decimal and it is entirely possible the debt is owed to a firm that belongs in part at least, to Bezos. Also Debt can be re-financed, and in this case we know it was, at least once. So it is critical to know the ratio.
As it turns out the ratio is actually more frightening than the debt load itself.
Chap 11 would be an interesting option. This might force the company to sell off the Busch parks provided Seas, as a company wants to stay in the aquatic animal world. I'm not sure what other kinds of assets they have to sell. So far as I know they do not own anything outside the parks. I suppose they may have patents and some IP they could divest, but I am unaware of any thing else, unused land perhaps.
Zimmy said:
Maybe they decide to divest the waterpark side of the business? Or Discovery Cove? I think there's a few interesting ways they go. Maybe they can sell assets within the parks themselves? I know the idea of selling components from DK, Empire of the Penguin, or Gwazi (not sure how much is left to sell) doesn't sound like a lot but it can have an effect.
warfelg said:
Yeah that is kind of where I was going. Selling off rides is an interesting thought. Unfortunately when you owe as much as they do, sell parts of an old AR ride like DK is not going to net you much, same with Gwazi. Further, you have to ask, "are they paid for yet?" Like most expensive things many rides come with a loan. Typically parks don't just shell out $10 - $50 M from cash reserves for a new coaster. They get some kind of loan. Now I have not the first clue what the terms are, but I doubt they resemble the 30 year note you have on your 2 story 25,000 sq ft brick on a 1/4 acre lot. So the question is, how much of the debt is loan service?
This was a great read and really puts the whole situation in perspective for me. I think one important detail to note is, I think three key events set 2017 up to be one EXCEPTIONALLY bad year.
1. One Q1 conference call they mentioned that in April/May they made up all of Q1 losses due to the shift in Easter Holiday. With that said, Joel stated that they pulled back on advertising to save money as they were seeing a positive trend in attendance across all parks outside of California. I can't remember when he said they did it. This was a huge mistake because they stopped getting their name out during a key planning period for Orlando Vacationers. During the Q2 call, investors and analysts questioned leadership why they would make such a call. They even commented that it seems they are catching issues after they happen, when its easy to see it happening.
2. The hurricane during Q3 was disastrous. The parks were closed to long and this had a huge effect on the bottom line. If I remember right, somewhere in the ballpark of $30-50 million on adjusted EBITDA.
3. Recently, a premier holiday planner in the UK, Thomas Cook, stopped advertising SEAS parks in Orlando as part of their new animal welfare initiative. In addition, Thomas Cook is to be auditing SEAS at some point this year to evaluate if the parks meet standards to even continue selling tickets on the planner site. SEAS is in jeopardy of loosing a big source of sales in the UK. They have to nail, and be ready for this audit to try to gain some trust back.
All in all, I think without the hurricane the books wouldn't look as bad. However since last year was so bad, they have a prime opportunity to do EVERYTHING necessary to get people in the parks, and turn at least a flat return to begin gaining consumer confidence. If they're done again, its going to be even more desperate.
1. One Q1 conference call they mentioned that in April/May they made up all of Q1 losses due to the shift in Easter Holiday. With that said, Joel stated that they pulled back on advertising to save money as they were seeing a positive trend in attendance across all parks outside of California. I can't remember when he said they did it. This was a huge mistake because they stopped getting their name out during a key planning period for Orlando Vacationers. During the Q2 call, investors and analysts questioned leadership why they would make such a call. They even commented that it seems they are catching issues after they happen, when its easy to see it happening.
2. The hurricane during Q3 was disastrous. The parks were closed to long and this had a huge effect on the bottom line. If I remember right, somewhere in the ballpark of $30-50 million on adjusted EBITDA.
3. Recently, a premier holiday planner in the UK, Thomas Cook, stopped advertising SEAS parks in Orlando as part of their new animal welfare initiative. In addition, Thomas Cook is to be auditing SEAS at some point this year to evaluate if the parks meet standards to even continue selling tickets on the planner site. SEAS is in jeopardy of loosing a big source of sales in the UK. They have to nail, and be ready for this audit to try to gain some trust back.
All in all, I think without the hurricane the books wouldn't look as bad. However since last year was so bad, they have a prime opportunity to do EVERYTHING necessary to get people in the parks, and turn at least a flat return to begin gaining consumer confidence. If they're done again, its going to be even more desperate.
musicman3204 said:
During our trips to Discovery Cove we've heard a lot of guests that sounded like they were from the UK, and on our first trip there we were grouped with a Brit family for the dolphin swim and the dad said that DC and SW were part of a travel package they purchased. And IIRC (lived in the UK but many years ago), Thomas Cook was a large travel agency so that would be hit on SEAS attendance there.
musicman3204 said:
I can not emphasize this enough. Their problems are not single, dual, or multiple outside event driven. Yes the Hurricane and Blackfish hurt their bottom line and other external factors have driven down ticket sales but the root problem is much, much bigger. It comes down to one self inflicted thing, debt to asset ratio. By 3rd Q 2017 they were hovering just under 5 to 1 by now they may have crossed that particular boundary. Further some of their investment dollars may become vapor as an investment company is about to fail. This will destroy the share value as the Chinese investors will have to sell rock bottom to divest to try to pay off some of their debt. Of course a quick sell off usually results in a drop is share price. (as I said before I am uncertain how bankruptcy works in a Socialist / Market Capital / Command Economy China)
For perspective, imagine if you procured your house for 0 down at 500k and had 100k in mutual funds. Now lets assume your income to service that debt was seasonal and sometimes not consistent. Now lets assume that because you are part of a big family who's estate has lots of money (you just don't have access) banks will keep lending to you. You have a annual budget short falls on your debt service funds, (not of your annual families cost of living budget that is a different line item in this example). You can cover the loan each year because you can you sometimes re-fiance to change the debt and sometimes you borrow. In either case your D to A ratio gets worse.
How comfortable do you think your family would feel with this model?
Right, no one in their right minds would have this model, and no bank would support it. But this is EXACTLY where Seas finds itself. However instead of mutual funds that grow with time, they have property and equipment that is at the mercy of the markets and maintenance.
Seas' problem is not periodic nor is it entirely or mostly driven by one off events, it is endemic. It is from the inside at the top level. It is baked into their business model. From the way Blackstone organized the structure to be an investment to divest, to how the board seems to control the president they to be designed to be broken apart. Or sucked dry and left to die on the vine, much as Pan Am was. If they had their house in order they would be able handle these periodic mishaps like hurricanes with more grace, but as is they are not and therefore can not.
No make no mistake, if my projections, even the most modest are right, this is a self licking ice cream cone with no end in site.
You're absolutely right. I just have a hard time getting my point through. This year was just exacerbated by poor decisions, seasonal events, and public perception. Just from curiosity, how long do you see this continuing before bankruptcy?
I’m surprised nobody has thought of this. The best case scenario is if Herschend buys the parks. They would do absolutely amazing with them. Dollywood and SDC are amazing parks that are beautiful. I personally wouldn’t want Merlin to buy the parks. Herschend I would take over Merlin any day.
musicman3204 said:
Thanks,
To be honest it is hard to predict. So much of the information is being held privately. (funny how that works with a publicly traded stock) Of course the issue is not the stock and individual stock holders but with the primary investment companies like Blackstone.
Provided the debt ratio continues to climb at its current rate and does not accelerate, (which is has been doing) and they do nothing to offset the debt, so maintain status quo, they will be at 6 to 1 in less than 2 years. I will pause while you consider that. Incidentally, and again assuming few changes, (like a 30 million dollar coaster in BGW) they are closing in on 3 billion (with a b) in that time too. This numbers are alarming. Its not that there is some line in the sand, some magic number at which point the FASB takes away their accounting ledgers, or GAAP takes away their CPAs, or worse the SEC says, "you there, you go to your room and think about what you have done!" However somewhere, at some point, some recent finance grad is going to look at a ledger and say... "BY THE BEARD OF MOSES HIMSELF, THIS CAN NOT GO ON!" (Or something, see I'm really an ops kind of MBA not an finance type and all I ever want from accountants is that their green visors are on straight, their debits match their credits, and they are gone by 1400. So honestly I don't know what they say or who says it when they have that kind of wake up call. But the ex-theater person in me likes to think it is a young recent UVA Mac grad who makes good. Sadly they usually end of brokering commodities for Smithfield or working in a cube in Wall Street.... But I digress...)
So at some point when things are bad enough that there are no longer enough smoke and mirrors in the world to make this baby look presentable, the investors are going to loose confidence. Several things can happen then.
- There is a complete loss of confidence and a panic sell off. This would depress the share price and potentially push to a full liquidation or Chapter 7. I find this the least likely but most terrifying.
- They could have a wake up and see that the debt load is no longer manageable and call for a Chapter 13. This seems like a very likely scenario to me. In some ways it may be the best from our perspective. Everything continues to operate but they re-organize. You may recall that this is what Delta and the other airlines did. It could lead to a merger, or sell off of certain parks, but it will almost certainly lead to a complete restructure of the leadership and board members.
- They could course correct and fix the root problem. I wish this was how things would go, but I doubt very much it will. From where I sit the problem as I have mentioned is the very fox that is guarding the hen house. He does not see that he is a problem.
- Lastly they could continue on their merry way and at some point the SEC is going to start asking questions. That would be comical if it were not so bad. I say this because if they COULD continue on this way that is a VERY good indication that something is not kosher. The SEC, as they say don't play.
So I have been dodging the when. This will not likely happen in the next year or 2. But when it does, the dominoes will likely fall fast. My best guess is we will see some kind of change, forced or otherwise, by 2020 at the latest. (that is my best guess)
MadridBot said:
As Nicole has pointed out this has been discussed. But let me put a quick spin on the whole buy out idea.
Nothing is for sale. No one is offering anything for sale. In fact Seas has said it has ZERO interest in selling off pieces of the brand. That may not be for lack of interest on their part but logistics. With the current debt load, asset matrix, and who know what kind of convoluted loan service structure, it may not be even possible to easily cut ties. (they may be leveraging assets in one place to service loans in another. Nessie for example and long since paid for, so she has value as collateral)
Now if they go into Chap 7 or Chap 11 all bets are off.
Now I don't know that they have been this... creative with their loan structures, just that the possibility is out there.