12.18.2011

Distressed Debt Weekly Links of Interest AND a few Updates to Recent Posts

This week I am going to try something new.  Because there was a litany of news from the docket of a number of the bankruptcies we have followed in the past, I thought it would be beneficial to the reader to get a summary on some of the proceedings.  First the updates, then the weekly links of interest:

Great Atlantic settles with Secured Note Holders: We have discussed the Great Atlantic & Pacific Company's bankruptcy in a number of posts.  Most recently we discussed the calculation of the claim value of the company's Second Lien Senior Secured Note Holders.  This week it was announced that the company has entered into a plan support agreement (PSA) settling the amount of the claim at $304M with per-diem adjustments of $108,000 if the company exits bankruptcy before or after the assumed March 1, 2012 date.  This works out to an approximately 119 price on the bond.  I have to assume the company, under the direction of the junior note holders who are funding the rights offering, wanted to avoid any sort of delay in the bankruptcy confirmation (which may have been held up if the Second Liens litigated for the make whole).

Dynegy and PSEG reach agreement on Roseton / Danskhammer leases:  Importantly, this does not settle the amount of the lease rejection claim in the bankruptcy court.  As first discussed in this post: Dynegy's Bankruptcy, Dynegy filed for bankruptcy in November to restructure its capital structure and reject the leases on the Roseton and Danskhammer power plants.  What this agreement does though is leaves the pass-through notes as the only really opponent to the rejection of these leases and the associated damage claims.  Under the agreement, PSEG would receive an allowable claim of $110M against Dynegy and would receive $7.5M in cash from Dynegy, among other things.  From a valuation perspective, this means that the unsecured bond holders will receive slightly less as claims have increased marginally at the debtor.

And now the "Weekly Links of Interest"

An amazing insider look at manager's capital allocation decisions [hat tip Joe Koster's Value Investing World]

Another one from Joe:  A series of lectures from Bruce Greenwald's Value Investing classes at Columbia Business School [Value Investing World]

Zero Hedge's Chronicle of the Last Days at MF Global [Zero Hedge]

Latham Watkins with a detailed look on the amended Bankruptcy Rule 2019 [Latham Watkins]

Sardar Biglari's 2011 Annual Letter to Shareholders [Biglari Holdings]

Kyle Bass at AmeriCatalyst 2011 (amazing video!)

2 comments:

Kavin 12/20/2011  
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moldova vize 12/27/2011  

thank you for sharing.

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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.