That balance sheet has $353 million of upcoming debt maturities in 2009 and another $559 million the following year. Thursday, the company said it intends to pay debts through regular cash flow or to refinance. "I don't see any issues extending the line," said Rakowich who was ProLogis' president and COO before replacing Schwartz.
Explaining current financial conditions at the $40-billion company -- the world's largest owner, manager and developer of distribution facilities -- Rakowich said "we expanded into markets that had demand, but we expanded (too) quickly," noting growth markets like China, Canada and Korea. "There were no controls in place," said Rakowich adding, "we made some mistakes."
Still, he stressed, the overall market turndown had also happened rapidly. And with that, there's a sense of "heightened scrutiny" that was not there before. As part of ProLogis' 'transformational change' the company expects to see around 20% to 25% in savings through job reductions and the overall slicing of business spending, as GlobeSt.com reported yesterday.
Specifically, the company says it will save $2.2 billion to $2.3 billion by eliminating starts and new land acquisitions. With its dividend cut, the company says it will save $290 million in cash. And, with cuts to its general and administrative costs--which means jobs--the company expects to save another $100 million. Sullivan stressed the company is trying to be as transparent as it can.
Rakowich and Sullivan said they did not believe the company would sacrifice any liquidity to feed funds. However, they stressed the company would live up to its existing commitments and obligations. Still, they were clear about their current crystal ball's power saying that nobody could see into the future.
"We have lots of liquidity," and "we have a variety of things to attack with a spectrum of levers," Rakowich added.
Of the changes, Rakowich said "give us credit six months from now," even though some of the changes will go wrong, while some will go better. He acknowledged the new team will have more details on the changes and results in the months ahead. "We're not pushing you to trust us, I'm asking you to watch us," he said.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
