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December 26, 2008

Forest City fights back

Firm rebuts negative stock assessment

Cleveland Plain Dealer
by Michelle Jarboe

Forest City Enterprises Inc. on Wednesday strongly disagreed with a recent Morningstar Inc. article, saying the author's opinion that Forest City's stock is worthless was based on flawed assumptions and inaccurate interpretations of the company's debt obligations and its construction costs.

"We disagree in the strongest possible terms with Morningstar's opinion," spokesman Jeff Linton wrote in a statement. "Further, we are astonished and appalled that Morningstar would issue such an opinion without having made contact with Forest City."

Linton said no Morningstar representative has contacted or spoken to any senior-level executive at Forest City in two years. In a recent article, Morningstar analyst Matthew Coffina named Forest City among five stocks that he considered to have a fair value of zero. Five analysts who regularly cover Forest City have taken a neutral stance on the stock or expect it to perform slightly better than the market.

"We remain stable, with good liquidity and solid cash flow from our operations, and we have implemented a strategy to specifically address current market conditions," Linton said. Forest City shares closed Wednesday at $5.59, down 14 cents or 2.44 percent.

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NoLandGrab: The market will ultimately decide who's right, but with large debt obligations coming due and the company giving away tickets to Nets' games, things don't look too rosy for Forest City.

Posted by eric at December 26, 2008 7:56 AM