The management where total morons. Not as if we haven't seen that before.
I'd hoped they could be rescued by a buyout/takeover, making this a potential great buy. But not anymore. Curious to watch though.
More From The Birmingham News
Vesta kept spending amid woes
Buying spree included cars and costly bridge
Friday, August 25, 2006
RUSSELL HUBBARD
News staff writer
In 2004, Vesta Insurance Group had a loss of $17.3 million. But that didn't motivate any belt-tightening at the now-bankrupt Birmingham insurer, according to court documents.
Filings this week with U.S. Bankruptcy Court in Birmingham exhaustively detail the company's expenditures in recent years. The firm filed for bankruptcy earlier this month.
People who might be in for a shock include customers holding worthless policies, more than 100 fired workers, shareholders who have seen their stock fall to a penny, and out-of-luck bondholders who lent money expecting to be repaid.
Vesta's 2005 buying spree started in January, right after the company closed the books on its money-losing 2004. Expenditures included $316,000 for 10 vehicles, including a BMW 530i that cost $58,000. Then there was the $676,000 Vesta spent on a bridge across the Alabama River.
The company acknowledged in court papers that it owns property in Clarke County with a lodge, other buildings and a bridge the company paid for. Vesta said the property is counted on its books as worth $1.5 million, and is held by a wholly owned subsidiary called Vesta Timber LLC.
Attempts to reach Vesta were unsuccessful, but the bridge has made it onto the Internet. The Web site of Troy-based Conecuh Bridge and Engineering lists it as "featured project," complete with photos.
"Eight spans, 40 feet long, each on steel tower bents," the Web site says, citing the owner as Vesta Timber of Birmingham. "Built on vertical curve from waterborne river barge."
The last $45,000 payment for bridge work was made in December 2005, bringing the total cost to almost $700,000, according to the court filings. Nine months later - August 2006 - the company was thrown into bankruptcy by unpaid bondholders. Vesta said in an earlier court filing that it has released 110 employees, one-third of its workforce, because it couldn't afford to pay them.
But the top executives are being paid. Vesta this month got emergency bankruptcy court approval to spend $74,000 to pay salaries of the six top officers, including Chief Executive David Lacefield, through Sept. 1.
At the same time, Vesta's insurance subsidiaries are under government control in Texas, Florida and Hawaii. Regulators there found them insolvent and have told policyholders to find new coverage. The company, though based at offices in Liberty Park, didn't have any individual insurance subsidiaries regulated by the Alabama Insurance Department.
Shareholders haven't fared much better. The stock traded for 2 cents Thursday. From June 2004 until May 2006, Vesta didn't file quarterly financial statements with the Securities and Exchange Commission, citing accounting problems. The shares were removed from the New York Stock Exchange in February and now trade on an exchange with less rigid requirements called the Pink Sheets.
Aside from bridges, Vesta had a taste for vehicles, the court documents show. Vehicle expenditures in 2005 included $35,000 for a Ford Expedition and another $35,000 for an otherwise unidentified Chrysler. A Honda pilot was bought for $30,414, and a Toyota Sequoia for $32,000.
The company's bankruptcy court filings this week also include the first look creditors have gotten at the company's assets and liabilities. Vesta said it has assets of $14.9 million and liabilities of $214.3 million. Vesta said it owes wholly owned subsidiaries valued at $150 million. The largest external creditors are bondholders owed $58.8 million.
AI
