All about business

The ball certainly did drop on New Year’s Eve for some investors. But instead of bringing them holiday cheer, it landed with a big thud.

Many commentators blamed oil futures reaching $100 a barrel for putting investors on edge. But a convincing case could be made that the real hangover was triggered by announcements from H&R Block Inc., Zions Bancorporation and PHH Corp. after the stock market closed on the final trading day of 2007.

Their news was all related to the current credit crisis gripping the financial world, suggesting the sting from that mess is far from over.

H&R Block said it would pay ousted CEO Mark Ernst $2.55 million in severance and allow options on three-quarters of a million shares to vest, even though he led the tax preparer during its failed expansion into subprime lending. Minutes later, Zions said it would take an additional $55 million charge to earnings because of a significant drop in the value of some of its mortgage-backed securities.

And it wasn’t until just after midnight that PHH disclosed its pending $1.8 billion buyout had collapsed because one of its proposed acquirers, Blackstone Group, failed to raise the cash needed to close the deal.

By forcing investors to wait until the market reopened on Jan. 2 to react, all three companies likely won a host of new enemies on Wall Street, where last-minute surprises aren’t appreciated. That’s particularly true right now given how easily the housing and credit market malaise has gotten everyone spooked.

H&R Block’s filing with the Securities and Exchange Commission came at 4:31 p.m cash advance. on Dec. 31. Company spokesman Nick Iammartino said the company typically releases news before or after the market closes, and with this announcement, “we did it when we could.”

But that doesn’t make much sense given that the company says in its securities filing that its separation agreement with Ernst had been entered three days before on Dec. 28.

About 40 minutes after the H&R Block filing, Zions reported that it would take a pretax write-down of $33 million related to an off- balance sheet investment vehicle known as a commercial paper conduit.

That conduit, called Lockhart Funding, borrowed money short term in asset-backed commercial paper markets and invested the cash in longer-term assets like mortgage-backed securities and collateralized debt obligations, or CDOs.

Then at 12:18 a.m. on Jan. 1, PPH said General Electric Capital Corp. and Blackstone had pulled out of their buyout of the Mount Laurel-based vehicle lessor and mortgage lender. That was a result of Blackstone’s inability to secure debt financing for the deal.

There isn’t anything illegal about these after-hours disclosures. Clark Hinckley, head of investors relations for Zions, said the company’s filing followed SEC rules to get the information out as soon as it became available.

But this wasn’t just any night of the year. It’s hard to call that forthcoming when the news came out when no one was listening.
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