Trading Tips 101

[MaxShockeR]

Penson's restructuring plans & Letter of New Low price Security Policy


> Penson Worldwide plans restructuring, posts wider Q2 loss

Thu Aug 4, 2011 6:32pm EDT

(In paragraph 12, corrects interest expense numbers on long-term debt)

* To restructure co, cut debt

* To sell assets to raise capital

* Q2 loss/shr $1.06vs $0.29 yr-ago

* Q2 oper loss $0.12/shr

* Q2 rev $78.5 mln

Aug 4 (Reuters) - Penson Worldwide Inc , which posted a fifth straight quarterly loss on Thursday, said it plans to restructure itself after the securities clearing firm was hurt by low trading volumes and depressed interest rates.

Declining trading volumes have forced companies like Investment Technology Group and electronic trader Knight Capital to downsize their work force and cut costs.

Penson Worldwide, which has a market capitalization of $75 million, has lost nearly half its value since making troubling collateral disclosures in May.

The company said it is in talks to sell Penson Financial Services Ltd in London, and exploring options to run its Australia unit as a partnership or go in for an outright sale.

Penson, which has seen price target cuts from brokerages in July, said it expects the restructuring to help it save $24 million annually, and hopes to raise $100 million from the sale of assets.

The company said it would expand its outsourcing agreement with Broadridge Financial Solutions to include Penson's data centres and save an additional $15-$18 million. It's current agreement with Broadridge helps it save $7-$10 million.

Penson will also combine its U.S. futures and broker-dealer business into Pension Financial Services to free up $30 million in regulatory capital and cut costs by $2 million annually.

Chief Executive Phillip Pendergraft said in a statement that the clearing firm is "determined to return to profitability."

The cost savings and increased liquidity are expected to make the company profitable, strengthen the regulatory capital position of its operating units and pay down debt.

For the second quarter, Penson Worldwide's net loss widened to $30.2 million, or $1.06 per share, from $7.4 million, or 29 cents a share, last year.

Loss from operations was $3.5 million or 12 cents per share.

The interest expense the company had to pay on its long-term debt rose to $9.7 million from $7.4 million last year.

Shares of the Dallas-based company closed at $2.61 on Thursday on the New York Stock Exchange. (Reporting by Rachel Chitra in Bangalore; Editing by Roshni Menon)

> Penson Letter...New Low price Security Policy Aug 13 2011

http://www.moneywrx.com/pennies.pdf