4.25.2009

Distressed Debt News Weekly Round-Up

As noted in this post, Distressed Debt News, we are going to try to provide readers a short summary of some of the happenings and news in distressed debt world. This list if far from comprehensive as distressed news is a hot topic these days, and I expect coverage to increase as the default rate continues to climb throughout 2009 and 2010. Some other people do too.

If you have any tips or news stories regarding distressed debt, email me at hunter [at] distressed-debt-investing [dot] com.

Distressed Debt News - Week Ended 4/26/2009

  • Quebecor (US) Files its Chapter 11 Plan and Disclosure Statement: Under the plan, unsecured creditors are getting back notes for up to 50% of their claim as long as total claims in that class do not exceed $150M. Secured creditors (revolver and others) are to receive some combination of stock, cash, and preferred stock. The bond holders are to receive new common stock and warrants. A hearing is set for May 15th regarding the plan and disclosure statement. You can read the disclosure statement here: Quebecor Disclosure Statement
  • Motor Coach Industries Exits Chapter 11: Motor Coach received $230M in financing to emerge from Chapter 11. Motor Coach, a bus manufacturer, paid off its pre-petition first lien lenders with debt borrowed from the reorg, paid off its 2nd lien with a rights offering, and converted the third lien into all of the new equity. Debt was reduced by $300M. Affiliates of Franklin Mutual (Michael Price's old firm) are now the controlling shareholders. The bankruptcy docket can be found here: Motor Coach restructuring information
  • Hayes Lemmerz in Talks with Creditors: Auto supplier Hayes Lemmerz is in discussion with its creditors. Yet to file its annual report, Hayes is in a tough spot given what is going on with the domestic automarkets. If anyone is following this situation closely, please let me know
  • Masonite Schedules Confirmation Hearing: Masonite has scheduled its confirmation hearing for May 29th. The prepackaged plan was filed on March 16th. I am going to do a write-up on Masonite in the coming weeks. For a quick summary on the plan, see this press release: Masonite Restructuring Plan. Here is the docket: Masonite Docket
  • Eurofresh Files for Chapter 11 Protection: A producer of tomatoes, Eurofresh filed for Chapter 11 on April 21st in the U.S. Bankruptcy Court of Phoenix. There is $180M in Senior Notes, ~$40M of sub notes, and a ~$55M Term Loan. The Chapter 11 was prepackaged with the plan to convert $210M of debt into equity with an infusion of $10M of capital. Here is the bankruptcy information: Eurofresh Docket
  • Broder Brothers Threatens Chapter 11 is Bondholders do not Accept Exchange Offer: As we discussed in Distressed Debt Exchange Offers, distressed debt exchanges are becoming more and more popular. In Broder Brother case, the company is trying to solicit a 98% approval for an exchange that would give old bond holders new stock plus $444.44 in new notes for each $1000 of old notes they own. Kirkland Ellis is the legal advisor and Miller Buckfire is the financial advisor.
  • Emmis and Barrington Broadcast buy back debt at a discount: In an interesting trend, Emmis and Barrington bought back their term loan and bonds at a discount. Barrington bought over 1/2 of its existing senior sub bonds at a massive discount. The purchase was funded by an equity infusion from its sponsors. Emmis, a radio station owner, held a dutch auction to purchase some of its bank debt back. This is an interesting development as generally bank debt holders want their loans to be paid back at par. But I guess for certain funds and CLOs, getting back cash instead of going through a protracted bankrupty makes sense.
  • Spectrum Brands sets June 15 Confirmation: I have been following the Spectrum Brands bankrupty case for a while. It is a fascnitating one. Why? Generally speaking I see Spectrum Brands as a global business that will eventually come back. It's issues are one of high debt loan and cyclicality. Once the high debt load is gone, and the market for its products come back, a lot of money can be made by buying the debt on the cheap. This was originally a prepack - but bank debt holders do not like the plan in its current form. And frankly, neither do I. I believe too much debt was going to be reinstated and that bond holders were getting more than they deserve. Here is the objection, which is an incredible read. For more information here is the docket: Spectrum Brands docket
  • Other News That I haven't gotten time to go over: Star Tribune, Objections to the Charter Plan, Asarco stalking horse bid, Spansion, SGLP, Home Mortgage Cram Down Bill, Tronox, Chrysler (which we will be sure to report on early next week).

2 comments:

Miguel Barbosa 4/25/2009  

Hi Distressed Debt Hunter,

It is a real pleasure to follow your blog. I link to you as often as possible in my Nightly Investment Links.

I run:

1. SimoleonSense.com - a website dedicated to making value investors more well rounded

&
2. NightlyInvestmentLinks.com - a collection of nightly links for value investors.

Take a look at the website and let me know what you think.

Keep up the great work

Best,
Miguel Barbosa
founder of SimoleonSense.com

kfunck1 4/26/2009  

That Spectrum filing is indeed an intriguing read, thank you for linking to it.

Email

hunter [at] distressed-debt-investing [dot] com

About Me

I have spent the majority of my career as a value investor. For the past 8 years, I have worked on the buy side as a distressed debt and high yield investor.