PR Help for Orange County

The Jan. 30 editorial, “Pricey ‘Spin’ for Orange County,” ignores several key facts--not the least of which is that our firm’s involvement has saved the residents of Orange County tens of millions of dollars in additional losses.

Members of our firm, for example, were directly responsible for preventing a number of inaccurate and potentially damaging stories about the county and its bankruptcy from being published, including several which could have had a devastating impact on the county’s ability to restructure its portfolio.

For instance, just as Tom Hayes was getting ready to sell off the portfolio, our firm received inquiries from at least three reporters seeking comment on what they felt were significant “irregularities” in the portfolio. The reporters said they had found more than a dozen of what they believed were “bogus” listings which indicated bond issues held by the county were larger in amount than the entire issue itself. (In other words, the reporters were saying, the county claimed to have $200 million of a particular bond issue when in fact the total amount that was issued was only $150 million.)

Working throughout the weekend, we were able to track down each of these so-called bogus listings. We discovered that the reason the reporters’ information didn’t track was because the bonds they were looking at were shelf registration issues. (With shelf registration issues the only entity that knows definitively how much of a particular issue was issued is the issuer itself.) Presented with this information, the reporters did not publish their stories.

What would the impact on the sale of the bond portfolio have been had this story been published? If it had negatively impacted the sale price by just 1%, it would have cost the county $55 million.

I don’t disagree that our fees for December represent a significant amount of money. But our fees--as well as those of the other professional involved--must be viewed in perspective. During the 25 days we worked in December, the 10 members of our firm involved with this case collectively put in total of 21 weeks worth of time. Roughly 5,200 stories were published during the first month or so following the bankruptcy. A key part of job was educating reporters about some of the arcane and complex issues.

Our firm has been involved with 55 bankruptcies since 1989. These counties retained our firm as part of a team to preserve assets, assist them in reordering their affairs and to help them return as quickly as possible to business as usual.

In this particular case, had we done nothing more than stop the publication of the erroneous story discussed above, our most conservative estimate is that we saved Orange County in excess of $55 million. That, I would say, is a pretty good return on the county’s investment. However, we are confident that an examination of the facts will show we contributed a great deal more.

MICHAEL S. SITRICK

Chairman, Sitrick and Co.

Los Angeles