It's only a Friday, but it feels like Christmas morning. First the movie version of Dallas takes a header, now comes word that Affiliated Computer Services Inc.'s lendor wants its money back--pronto. How much? Maybe as much as $500 million.
According to filings with the Securities and Exchange Commission made yesterday, a week ago today Dallas-based ACS got a letter from the Bank of New York Trust Company in which the bank demanded "the principal amount and premium, if any, and accrued and unpaid interest, if any, on the 5.2 percent senior notes to be due and payable immediately." The note comes due in 2015. The Bank of New York just wants its money--about $250 million, according to court documents--nine years early.
ACS, as we've noted on many occasions, is being investigated by the SEC and the Department of Justice for backdating stock options to top execs, resulting in their pocketing millions of extra dollars. The scandal has also resulted in an internal investigation, which has many moaning about a conflict of interest, and several shareholder lawsuits. And it's also kept ACS from filing its annual financial report with the SEC, which was due September 28. That's a violation of its loan agreement, claims the corporation holding much of its stock.
ACS, as you oughta know, is the company that just won the city's $13.29-million red-light camera contract.
If you like this story, consider signing up for our email newsletters.
SHOW ME HOW
You have successfully signed up for your selected newsletter(s) - please keep an eye on your mailbox, we're movin' in!
As we wrote at the end of September, ACS has already filed a federal lawsuit in Dallas against the Bank of New York. The company brought the legal action because, as it said in other SEC filings, it received a letter on September 22 "from persons claiming to hold certain of its senior notes advising the Company that it was purportedly in default" of its loan agreements with the Bank of New York. It got another letter September 29 from the Bank of New York alleging the same thing. ACS filed the suit demanding a declaratory judgment affirming its position that, nope, ain't in default. In legal papers filed only yesterday with the court, ACS insists its loan agreement doesn't say it has to file papers with the bank, only the SEC, which it'll get around to doing eventually.
But it gets worse: In that same amended complaint filed yesterday, ACS said it received on Monday a Notice of Default from "certain holders" of a $250 million loan ACS has to pay back by July 2010, at 4.7 percent interest. From my math, looks like somebody wants ACS to fork over half a billion dollars, as soon as possible. If no one has that kind of petty cash lying around, there's always an alternative: backdated stock options. --Robert Wilonsky
The Flying Lizards, "Money (That's What I Want)" (from New Wave Hits of the '80s, Vol. 1)