From debt to dividends to downgrades

More trouble for Cleveland Browns owner Jimmy Haslam, via CBS sports:

As Browns owner Jimmy Haslam stands by to watch what happens to his Pilot Flying J company -- the FBI investigated its headquarters on the charges that the company had committed rebate fraud to a number of trucking companies, and a number of executives have since pleaded guilty -- he received more bad news last week.

According to the Wall Street Journal, via the Cleveland Plain Dealer, the Pilot Flying J has about $4 billion worth of debt and its credit rating has been downgraded by the S&P, which called the financial risk “significant.”

The tale of links in this piece is somewhat confusing, so here you go:

  1. Browns owner Jimmy Haslam's company Pilot Flying J is being investigated for fraud by the FBI and things don't look good.  In fact, the real question is not whether bad things happened (they did), but whether Haslam knew about the practice (he denies it).
  2. Pilot Flying J is being sued by dozens of trucking companies related to the alledged fraud.  
  3. The company issued a truckload of debt to fund dividends, some of which were used to bankroll Jimmy Haslam's purchase of the Browns.
  4. Pilot Flying J's credit rating has already been downgraded to BB status and is currently undergoing further review by Moody's.
  5. It really doesn't matter, since Flying J's credit rating was already low enough to be considered less than investment grade (meaning, it's junk grade stuff).
  6. As of this writing, the Browns still suck.

On the positive side of the ledger, can't we at least dismiss the trucking companies as a bunch of collectivist assholes?



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