Forever trusting who we are, and nothing else matters

The Bloodless Empire’s Q2 results remain “preliminary”:

At the end of last week, the company became aware of circumstances surrounding an investment held by First American Title Insurance Company (FATICO) in a title agent that may cause the investment to be impaired. The company is currently evaluating whether to impair its $37.3 million carrying value; however any impairment will not impact FATICO’s statutory surplus. The final determination with respect to any impairment will be reflected in the company’s Form 10-Q for the quarter ended June 30, 2008, which it expects to timely file. Consequently, the results presented in this news release are preliminary.

Anyone want to hazard a guess as to what agent FATICO has  $37.3 million sunk into that might be impaired? I think we have the answer to our question.

Net income per share $.45.

The split is on terminal hold.

One Reply to “Forever trusting who we are, and nothing else matters”

  1. From Inman News:

    Mercury sued First American Corp. in May in an attempt to obtain a judgment from a federal district court that would force the company to continue underwriting title insurance policies on behalf of Mercury’s California subsidiaries.

    The lawsuit claimed that Mercury and First American had agreements that, among other requirements, called for Mercury and its affiliates to be First American’s exclusive agents in Colorado (see story).

    In a July 17 answer to the lawsuit and counterclaim, attorneys for First American said Mercury breached the agreements by refusing to repay millions in loans dating back to 2001 or convert First American’s nonvoting preferred stock in Mercury into Class A common stock as promised.

    In November 2004, First American alleged in its counterclaim, Mercury issued a promissory note obligating it to pay First American Title $15 million by Oct. 31, 2005. The maturity date was later extended to Sept. 30, 2007, with Mercury obligated to pay 12 percent interest on any outstanding debt after that date.

    In June 2006, First American Title agreed to pay Mercury $75 million in exchange for 75,000 shares of nonvoting preferred stock, which was to pay dividends of 5 percent a year. First American claims that under Mercury’s articles of incorporation, the stock was to be automatically converted into Class A common stock if Mercury did not announce plans to redeem the shares by Sept. 30, 2007.

    Mercury did not redeem the shares or convert them into Class A common stock with voting rights, and has failed to pay principal and interest on other debts, First American alleges.

    “Mercury has breached its agreements (by) … refusing to pay dividends, principal, interest and other sums owing to (First American), failing to perform key obligations under the agreements and Mercury’s articles, and by failing to provide other performance required under the agreements,” First American’s lawyers said.

    First American is seeking an order preventing Mercury from holding shareholder meetings or votes without notice and consent of First American Title.

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