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Uh.... that's not how math works. What you mean to say is "The Globe sold for $70 million, but if you think about the pension obligations, the buyer is really
by fennecfoxen 13y ago
Uh.... that's not how math works.
What you mean to say is "The Globe sold for $70 million, but if you think about the pension obligations, the buyer is really paying about $180 million for it." which is very different from the "sold for -$40 million", which isn't even a thing that makes sense.
- snewman 13y agoNo, the seller is retaining responsibility for the pension. Imagine that the Globe was worth $X including pension obligations. Then the Globe unencumbered by pension obligations should be worth $X+110M. The sale price implies $X+110M = 70M, so X = -40M.
- jthol 13y agoThat's not what the article says. >That's because the terms under which John Henry is buying the paper stick the New York Times Company with the Globe's pension obligations, which are said to amount to around $110 million. Which is to say that the worth of the overall Globe enterprise is negative $40 million, not $70 million. emphasis added
- pbreit 13y agoNotice that your emphasized words clearly state that the NYT (the seller) will pay the pensions, not the Globe's new buyer. So the article is correct.
- jessedhillon 13y agoThe seller is keeping the obligation to pay for $110M in pensions. So from the seller's standpoint they -- assuming all rights to profits are surrendered -- are walking away from the Globe with a $110M long-term obligation and $70M in cash, stock or whatever. Still not equivalent to saying it's a $40M loss since the pensions will be paid out over presumably a much longer time than the sale payments will be received.
- rayiner 13y agoI'm assuming the pension liabilities are quoted in present value terms, which is usually the case.
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- badman_ting 13y agoI disagree, the math makes sense to me. Seller kept pension obligations, buyer didn't take them on.