Warren Buffett 300 mil to HD

[GasMan]

http://www.cnbc.com/id/28998181/site...ext|&par=yahoo

Looks like a possible helping hand!

[shovelmike]

That is a very good sign. It is bound to boost investor and consumer confidence when Warren Buffet considers H-D to be a good risk.

[rjrivero]

He's getting 15% on his investment? That's loansharking. I don't see this as being a good thing in the long term. This is going to be a big issue for Harley. It looks like desperation.

[unfknblvbl]

Even though I'm a huge fan Harleys, I don't agree with this 900 billion dollar plan. Glad to see the MoCo using different avenues of approach, even they did ask Uncle Sam for money.

[Buzz Kanter]

Unless I am mistake, Buffett is not buying Harley stock, but a note guaranteeing him a 15% return on his investment. Pretty good for Warren, but have to wonder why Harley will pay so much for a loan.

[pclayton2]

Warren Buffett doesn’t do anything because it's good for other investors or the company. He invests because it's good for him. 15% return on his investment will suck valuable money needed for new product development. 18 to 25 year old riders cannot afford 15 to 30 thousand dollars for a motorcycle and the loyal Baby Boomers lost so much of their 401K money in the stock market crash that allowed them to purchase new HD's, they cannot afford them either. HD needs to get the prices down and younger riders to buy their bikes or they will be in worse trouble in less than 5 years.

[GasMan]

Warren Buffett is also a stockholder via his holdings company. Yes, it was a financial deal with the money arm of HD but it was agreed by all involved. HD has some pretty good people in management, especially in the financing arena. This has given more flexibility to that area to loosen up the cash flow for those that want to get a scooter. More now than ever, HD can devote those funds that were earmarked for developing models to that instead of diverting it to cost overhead.

[Buzz Kanter]

Here's another professional analyst's take on it:

Harley-Davidson Inc. (HOG) issued $600 million in senior unsecured notes on Tuesday, getting more financing for its struggling lending arm from, among others, Warren Buffett.

Shares of the iconic motorcycle company jumped on Tuesday, rising 13% to $ 13.40 in recent trading, after earlier spiking as much as 23%. The shares have lost nearly three-quarters of their value from their 52-week high in April.

Much of the stock decline can be tied to the company's large amounts of debt coming due in the first half of the year. While Tuesday's fund raising won't be put toward paying the debt, the company and analysts believe its actions showed it has a greater chance of reaching a new agreement with lenders before that debt comes due.

The company, whose sales have been battered as consumers have cut back on major discretionary purchases, said the debt would go to help increase lending activities at its Harley-Davidson Financial Services company, which makes loans to both dealers and consumers.

Davis Selected Advisers LP, the company's largest shareholder, and Buffett's Berkshire Hathaway Inc. (BRKB) each bought $300 million worth of the notes.

The notes will be due in 2014 and will carry a 15% interest rate per year. The company said the high interest rate was because of the difficult credit markets.

Many of the recent concerns about Harley-Davidson shares have come from a $500 million credit line that expires at the end of March, as well as another $950 million due in July.

FTN Midwest analyst James Hardiman said the appearance that Harley is able to raise $600 million alleviates some of the fears it won't be able to pay off that $500 million, even if the funds don't get used directly on the debt.

"The ability to get $600 million is certainly positive," Hardiman said. "In addition to that, any time Warren Buffett and Berkshire invest in something, people say let me take another look at that stock."

Harley-Davidson spokesman Bob Klein said that the company wasn't using the funds raised with this offering - or any of the billions it is hoping to raise for the financing arm - to pay off that line of credit.

"We are exploring ways to increase and extend that," Klein said. "We are working on that, and we believe that the fact that we were able to complete a transaction, we believe that speaks to the underlying ability to do that."

Last week, Fitch Ratings warned it could lower its credit ratings on Harley- Davidson because of the debt and the demand problems, and Standard & Poor's had already cut the company two notches.

Late Monday, the company said in a filing with the Securities and Exchange Commission that it was amending its risk factors list, the potential concerns investors should consider before buying the stock, which it is required to do before issuing new offers. It said it was seeing increasing problems for sales in 2009, which were being heightened by the credit crisis.

The company said the slowing economy was making it difficult to sell motorcycles and that the credit markets were making the situation even worse.

Harley-Davidson said the debt offering is part of a three-prong strategy under which it is attempting to address the current environment. The strategy focuses on stimulating consumer demand by investing in the lucrative Harley-Davidson brand, aligning the company's cost structure and securing additional funding for the lending arm.

The company said in late January that the financing arm had $1 billion in unmet cash flow needs for 2009 and that it was looking to borrow unsecured debt or tap into federal funds to help increase lending for consumers, and drive sales.

Hardiman said the company remains in a solid position to rebound when the market eventually returns to discretionary spending.

"We've been saying for a while that when the time comes, Harley is going to be extremely well positioned to take advantage," he said. "But when Warren speaks, it gives it more credibility."

[WFO]

Debt=Risk, so they are taking on some risk. Basically a hight interest short-term loan. They are banking, like most of us, that the economy will turn around.
Bet those that voted for Osama, now wish Clinton had gotten the nod or McCain. When a president says there won't be a prosperous WallStreet without a prosperous main street it says he's talking about the 30% of Americans that have no savings, 401k, or pension. The other 70% have the above and make up a large part of WallStreet!
What many people fail to realize, is HD is a publically traded company "ON WALLSTREET", which is what the company has to answer to.
The market has gone down 2k in 2 months, and probably to 6k by the end of March without some serious input on confidence from our fearless leader.
Amazing what some people don't know about Harley, WallStreet and our current gov't!
Sorry for the rant.......

D

[rjrivero]

WFO

HOG closed at $9.10 today, didn't it? It'll be at $3 by the end of the month. This loan has done nothing to help confidence.