Billing Services Share Discussion Threads

[lagosboy] 02/4/2014 17:40

Are you suggesting they have insider knowledge or just guessing and hoping like the rest of us?

[21trader] 02/4/2014 16:35

That buyer is happy to pay full offer for the odd block of 100k or 250k.

[lagosboy] 02/4/2014 09:27

The key has nothing to do with what is priced in by the City. This is not Vodafone. The share price will only react when the number is known and the future cash flows adjusted.

Bill historically had an EBITDA of circa 25% on enhanced revenues - if managements figure below of $886,288 is adopted as a proxy for EBITDA that equates to $3,544,912 of unauthorized billings. To my mind that is the starting figure, it must be based upon something tangible and whether or not the Judge sees fit to add a further penalty one can only speculate. $5 m looks a reasonable number to me.



The FTC's $30.1 million damages request reflects amounts billed consumers for the services, minus any refunds previously provided.

But Bemporad wrote that figure is "based on the assumption that every consumer who was billed for voicemail charges did not authorize the charge. As shown by the evidence, many customers have in fact authorized the charge, even if they did not use the service."

BSG, meanwhile, said any damages imposed should be limited to the amount of its gains, which totaled $886,288. Bemporad found that figure inadequate.

[trentendboy] 02/4/2014 09:09

30m sounds alot.

The key is what value is priced in my the city (and what BILL can afford).

Good research

[gark] 02/4/2014 08:59

I think you are right. This gets settled for around 5mn.

[m1keg] 02/4/2014 08:32

Not the ruling itself but a much better write up than the company gave us.

hxxp://www.expressnews.com/business/local/article/S-A-company-found-in-contempt-5358433.php

So the answer lies between .9 and 30m usd for the moment. My guess and thats what is is 6m.

[gark] 01/4/2014 21:49

It is and I have read the report. Will try and get you a link.

[m1keg] 01/4/2014 21:18

I agree with you and is the reason I'm invested here in a small way. Since we never get to see the whole picture though I wonder why we were compelled to add another 2 million to the restricted pot this year?

The contempt thing is a legal nightmare with so many different ways of getting to an outcome. Does anybody know if the current Magistrates reasoning is in public domain?

[gark] 01/4/2014 20:28

BILL is indemnified against further losses in the Verizon and AT&T class actions as they have agreed that Bill will provide the restricted cash amounts only so these are already held in reserve and hence cashflow still looks pretty compelling in my view.

[trentendboy] 01/4/2014 19:25

Good posts. The class action fines could be very high. That is my concern.

[m1keg] 01/4/2014 19:09

After a quick read up I have to agree that the original loan to finance the extraordinary dividend does look to proceed the problems of enhanced billing but I'm a cynical old sod and putting the company into hock like this is not my idea of good management.

For trapped read restricted got my terms mixed up.

From the Annual Report

The Company ended the year with $12.7 million of unrestricted cash.

As previously announced,we have been managing numerous governmental litigation issues and two class action litigation settlements. (Mike Note these are against the LEC's)

Change in Restricted Cash
.
In the ordinary course of business, LECs withhold funds from their payments to the Company in order to create a reserve securing potential future obligations of the Company to the LEC. During 2012, the Company reached an agreement with one LEC pursuant to which the LEC released $14. 3 million of cash reserves and concurrently transferred $14.3 million of cash into a restricted Company bank account which will be used for funding the Company's indemnification obligation
under pending class action litigation against the LEC.

During 2013, the LEC released a net additional $2.0 million of cash reserves, which was transferred to the restricted Company bank account. The Company's resulting $16.3 million of restricted cash at December 31, 2013, combined with
$12.0 million of indemnification credits recorded in 2012 (see Non recurring Expense above), resulted in a total of $28.3 million of liquid resources available at December 31, 2013 to satisfy the Company's indemnification obligations associated with class action litigation.

Note Mike

So the 12 + 28 is the 40m that gark is mentioning I assume. 12 is the companies to help pay off debt and the FTC fine eventually plus at least one other LEC I believe who has no agreement yet. The restricted 28 is for the two class actions against the two LEC's who have made agreements with the company.

I'll have a look around for contempt fines in the USA later.

[gark] 01/4/2014 17:21

The class actions are targeted at the LEC's and encompass enhanced services. BILL have put aside c. 46mn and reached settlements with the LEC's so that these cover all BILL's liabilities. The cash was paid out upon sale if the wireless business to Syniverse as an extraordinary dividend.Two things are unrelated.

[lagosboy] 01/4/2014 17:15

I am getting a tad confused by some of the comments.

BILL did not put itself into debt to avoid cash on the books - from memory, and I do suffer from dementia from time to time, BILL re-financed existing debt to facilitate the payment of a dividend. A process that I would suggest would be treated as a preference and also place the directors at serious risk of further legal action if it was viewed as an asset strip to avoid being able to meet any damages awarded to the FTC.

I don't understand what is meant by 'trapped cash' and would appreciate clarification.

I am under the impression that there is no class action lawsuit underway currently - surely that would follow the FTC case if it had merit once a determination is reached. I might be totally wrong here.


The FTC complaint relates to nine enhanced service products provided to consumers by third-party vendors during the period from 2006 to 2010 for which BSG provided billing services. The FTC seeks an order to show cause why the Company and the named subsidiaries should not be held in civil contempt and ordered to pay a sanction of $52.6 million, which amount is based on the net amount charged by third-party service providers to consumers for the nine enhanced service products. The Company believes that the FTC's action is without merit, legally and factually, and it intends to vigorously defend itself in this matter.

I understand from the recent ruling that the judge considers $52.6 m quoted above is way too high due to the scope of the contempt being far more limited than that originally claimed by the FTC.

My view is that the judge wants to make this clear at a further hearing to allow the FTC further representation with a view to reaching a settlement without wasting further Court time. If that settlement is not reached I suppose the FTC will continue with its legal action.

We must also keep in mind that BILL was not a seller of these services, so as I see it unless the FTC can show that BILL was complicit and acted in tandem with the enhanced services providers, any claim against BILL should be predicated upon their systems and internal controls failing to disclose fake services and over-billing.

If we move into the area of complicity, criminal sanctions become a reality and to date this has never been alluded to. BILL have throughout maintained that their systems and controls met all the necessary requirements and standards.

Any award must be based upon the facts and actual losses plus a penalty, the $52.6 m would be appear just to be the gross enhanced billings revenues and therefore assume 100% of these were fake which simply can not be true.

Will be interesting to hear what Mike comes up with as I remain hopeful of a good outcome.

[m1keg] 01/4/2014 15:40

I have to go back and refresh my memory on this but I must admit at this moment I believe they are different issues. Same source of error/crime but different class actions. Hence the no double recovery mentioned by the magistrate. I believe the LEC's have already got a repayment system up and running. I'm sure I read the take up was very small and it was going to turn out a lot less of an issue than they thought. There is no money in it for the lawyers with the individual amounts being so small and little hope of damages.

I'll try to find some time to dig into this again.

[gark] 01/4/2014 15:02

The class action is related to the FTC action as both cover the same products and refunds for those products.

[m1keg] 01/4/2014 14:46

I think we are confusing two different items here. I may easily be wrong and need assistance here but I think the 40+ million you are talking about includes the trapped cash that can only be used to pay the LEC's involved for any class actions against them. That cash is not set aside for this FTC action.

I have to go back and reread the accounts to try to split out these amounts but given BILL pushed itself into debt to avoid having any cash on its books that FTC could easily get its hands on I doubt they have too much squirreled away.


Thats one of the reasons I think that trapped cash is coming back at some time. It was seen as another way of moving money out of harms way and killing two birds with one stone, appeasing the LEC's being the second.

[gark] 01/4/2014 14:24

So given they are paying back about 45mn and the action was for 52 and the judge said it was much more limited and that he didn't want double recovery what do you predict?

[m1keg] 01/4/2014 14:00

Thats not the way it reads to me at all. The Contemp case has been reduced in size from what the FTC asked for (with a fine of 50m). My point was that the law do not like people ignoring their decisions and will still expect a multiple penalty against the profit made. We are not just going to be allowed to give the money back!

[gark] 01/4/2014 14:00

I don't see it that way at all. FTC was after 52mn so an additional hearing is to decide something lower or a settlement before.

[trentendboy] 01/4/2014 13:22

See quote from RNS:

"..but because the contempt finding recommended is considerably more limited than that suggested by the FTC, Judge Bemporad further recommends that additional proceedings be held in advance of any determination of damages."

He wants "additional proceedings" to bump up the fine because the contempt finding does not allow them to make the fine as high as he thinks it should be.

[gark] 01/4/2014 10:51

Don't get the logic. He has narrowed timeline and scope for fine.

[trentendboy] 01/4/2014 09:23

Agree with Mike - fine will be higher than the amount put aside is my suspicion. These things always come out as more expensive that first thought. The judge is worried that the fine will be too low unless so hsi judgement reflects his disire for a heavy fine

[gark] 31/3/2014 22:52

What do you think the fine will be? I think 2-3mn but might be as much as 5. Given report I would think it gets resolved in 3-4months.

[m1keg] 31/3/2014 22:21

Anybody got a feel for the time to get a new hearing or does it get to that? Maybe FTC now goes for a deal if their case is limited. Don't think we have to forget that Contempt is against the system itself and they do not like that. Fine / deal is going to be bigger than we would hope for in my opinion.

On another point anybody heard how the take up of money is going against the LEC's. I have a sneaky suspicion that a lot of the trapped money held against these costs could be coming back to BILL eventually. Again it is a question of when. I'm pretty sure I read an article that the take up by users who may have been over-billed was small but cannot seem to find it again. Love to know how long before the time runs out to claim.

[lagosboy] 31/3/2014 21:44

Lets hope so