STUDENT TRANSPORTATION INC 5.25 PCT DEBS T.STB.DB.A

RE:RE:RE:RE:RE:Screwed

[goldsternp]

I totally agree with you that Denis and his team do a great job running the bus business and should focus on what they are best at.

I also noticed that their forward currency contracts were not a good deal. Not having to worry about that in the future makes sense, but they could have set the new US$ dividend  closer to the historical rate as a nice gesture.

 If, as they say, a $2.1 million currency loss will be reduced  to $300 thousand with the dividend change, then they could have, at least put the savings into the dividend and made it US$0.0386

The economics of the CDN equity offering don't make sense to me. The money was raised 3 months prior to the CD redemption date and at a cost of non income deductible 8% when there was an adequate line of credit available at a cost of 2-4% of tax deductible interest. To make matters worse, the company had to pay an 8% dividend plus 6.75% interest on the CDs for 3 months.

The profitabilty of managing a non owned bus fleet isn't clear to me and so far the numbers have not indicated that it is positive although shareholders equity and cash flow did improve in the last quarter. This business model is making me a bit nervous until the benefits are clear.

I have tried to convince myself that shareholders equity is much better than the financial statements show because they own many fully depreciated buses. I have asked about this several times but nobody was ever willing to comment. So I have to assume that shareholders equity does indeed continue to decrease.

I still own a big chunk of STB after moving 30% elsewhere. When I am more comfortable  with the processes I will be happy to return in full strength.