Northeast Ohio Developer Scales Back
The financially shaky Mervyn's retail chain announced it was closing shop, this past Friday, which prompted some speculation about Beachwood-based Developers Diversified --- also known as DDR --- which had a stake in the failed company. To calm any potential market tremors, DDR issued a statement Monday morning that it owned less than 20% of Mervyn's in a joint partnership.
CEO Scott Wolstein then made a pledge to any nervous lenders that DDR would carefully monitor it's future investments. Wolstein recently had to sell over 20 million dollars of his own stock due to what's known as a "margin call" --- when a broker calls for cash after stock bought with borrowed money takes a steep drop in value.
Rich Moore, an analyst for RBC Capital Markets says Wolstein was admitting he learned a sobering lesson..
MOORE: He's basically assuring the shareholders that he's going to be very careful with the amount of debt that Developers Diversified has and that he understands that having all this margin on his own shares was probably not a good idea.
DDR also announced it plans to scale back projects in Russia and Brazil until global economic jitters settle down.