Subscribe to Print Edition | Fri., October 24, 2008 Tishrei 25, 5769 | | Israel Time: 02:13 (EST+7) web haaretz.com   Back to Homepage Haaretz Toolbar Diplomacy Defense Jewish World Opinion National Print Edition Car Rental Books Haaretz Magazine Business Real Estate Peres Center Travel Week's End Anglo File

Comverse reports $200 million in troubled ARS holdings By Nir Zalik Tags: Israel news, Comverse Comverse Technologies reported to the SEC that it holds $200 million in Auction Rate Securities - a type of loan-back bond whose interest rate is set by monthly auctions. The company also reported $1.5 billion in cash, cash-equivalent and short-term investments assets. In addition, the company reported that it spent some $75 million in the year ending July 31 on the investigation of the options' backdating and expenses related to the reissue of the company's financial reports by an ad hoc board committee. Auction Rate Securities (ARS) are a type of long-term, 10-40 year bond issued by companies, municipalities, institutions and credit card companies, with interest rates reset through auctions held weekly, fortnightly, monthly or once every five weeks. Advertisement ARS provides liquidity to companies that securitize cash flow, such as from credit cards, home mortgages, student loans and municipal debt, and enjoy a high rating of AAA. Ostensibly, ARSs are long-term financial instruments, but in practice their redemption is contingent on the frequency of the interest rate auction: The instrument used for setting interest rates affords bondholders and investors seeking to buy them the opportunity to trade on the interest. If the interest rate offered is lower or equal to the interest rate set by auction, they will continue to be held by the bond holder, and if the interest rate offered is higher than that set by the auction, the bond will be sold to the auction winner based on the auction rate. The instrument, developed in the 1980s, enjoys a high degree of liquidity, but since ARS issuers and bankers brokering the issue have no formal obligation to make market for the instrument, with demand far lower than the bonds offered for sale, auctions were canceled in the summer of 2007. A number of Israeli companies hold this type of bond, including Retalix, which invested some $1 million in ARS in late 2007 and reported a fair market price on the investment at about $800,000 in its second-quarter financial reports. Bookmark to del.icio.us   Palin as Olmert? Free flights and life of luxury characterize both the VP hopeful and our outgoing PM 'Hit a Jew Day' St. Louis middle school students face punishment over spirit week game gone bad

Read & React Iranian official: Tehran proud of its support for Hezbollah, Hamas Responses: 132 Security services draw list of Israel officials liable for Hezbollah attack Responses: 44 Barak to AG: Limit Hamas prisoner visits as pressure for Shalit release Responses: 54 Israel military rabbi under fire for 'brainwashing' soldiers Responses: 109 Israel Harel: Has Israel become the modern-day Sodom and Gemorrah? Responses: 80 More Headlines 00:41 Livni: I'll call elections Sunday if no coalition formed by then 00:40 Hamas: Jerusalem stabbing is natural response to Israeli aggression 23:18 'To stab such a man, at such an age, was an animal-like act' 00:41 Family of four found shot dead in their central Israel home 23:59 Palin as Olmert? Free flights, fancy clothes and life of luxury 23:55 Culinary show on Hitler's favorite food comes under fire 20:27 'Hit a Jew Day' lands St. Louis students in hot water 17:00 Peres in Sharm el-Sheikh: Saudi plan can bring peace to Mideast 21:53 Romanian Jews decry 'worst act of vandalism in recent times' 21:16 Arad police raid marijuana grow house, seizing hundreds of plants 19:02 TASE closes with mixed results as Bar-On vows to combat downturn 09:56 Israel military rabbi under fire for 'brainwashing' soldiers 17:02 Security services draw list of Israel officials liable to be Hezbollah targets 23:09 Israeli official weighs into row with Vatican over Nazi-era pope Previous Editions Select Day 23 oct 22 oct 21 oct 20 oct 19 oct 17 oct 16 oct 15 oct 14 oct 13 oct 12 oct 10 oct

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