Forum Archive Index - May 2000

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

>
> Thought some people might need the flaw pointed out to them - hence
> the problems with NTA.  FFS has debt - true.  
> Possibly $700m, I don't know.
> 
> If a profitable company bought FFS, the value of the debt isn't
> necessarily -$700m.  It depends entirely on the applicable tax laws,
> but if the transaction is structured to allow Loss Carry Forward and
> the tax rate is 33%, then the value of the debt increases by
> 700m*0.33 i.e. roughly $230m.  
> 
Oliver , I see your point about carrying forward a 'loss'.   But 
surely a 'debt' isn't a 'loss' any more than a mortgage on your house 
is a 'loss'.    Once you sell off your house, hopefully with enough 
money to fully you pay off your mortgage, you then pay off your 
mortgage and it is gone.    Then you pocket whatever money remains 
which is the NTA of your house.  Or am I missing something? SNOOPY

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