tag:blogger.com,1999:blog-6321089372587128676.post6032569679222251464..comments2023-10-17T10:01:00.917-04:00Comments on Distressed Debt Investing: Distressed Debt Analysis - TRXUnknownnoreply@blogger.comBlogger5125tag:blogger.com,1999:blog-6321089372587128676.post-27538284621793344612010-07-20T14:23:19.693-04:002010-07-20T14:23:19.693-04:00This comment has been removed by the author.Josh4580https://www.blogger.com/profile/01646612647304879747noreply@blogger.comtag:blogger.com,1999:blog-6321089372587128676.post-26160180172541724412010-07-20T09:35:10.653-04:002010-07-20T09:35:10.653-04:00Hunter,
"Given the fact that comps in the sp...Hunter,<br /><br />"Given the fact that comps in the space are trading at 5.5x-6.0x, I would lean to the higher end of the valuation spectrum...call it 75-120. And I think some arrangement gets made so that the tort claimants come onboard - but for that I would have to discount the recovery call it 10%. "<br /><br />What comps are you using that are trading at 5.5x-6.0x? KRO is the only public "direct comp" out there and is trading with an EV of 1.591B and TTM EBITDA of 73.6M, for an multiple of 21.5. HUN & DD are trading at 2010E EBITDA of around 8. <br /><br />Why are you using a 10% discount rate for the risk of the tort claimants voting against the plan. If they do vote against the plan, it would add anothe $2.05 billion into the equity pool, and could reduce the Notes recovery to around 22%. This seems like a much larger risk that just using a 10% discount rate, right?Josh4580https://www.blogger.com/profile/01646612647304879747noreply@blogger.comtag:blogger.com,1999:blog-6321089372587128676.post-61316105955583549232010-07-19T23:22:06.555-04:002010-07-19T23:22:06.555-04:00Normally these Chapter 11 emergence plans are cons...Normally these Chapter 11 emergence plans are conservatively framed, particularly when there is an equity committee trying to grab for as much as they can. The management normally has an incentive to keep bondholders happy and get them on board for the plan since they are typically the majority holders of the new equity.<br /><br />I'm sure there are exceptions, but the above seems to be a common case.persistentonehttps://www.blogger.com/profile/04962190758037772672noreply@blogger.comtag:blogger.com,1999:blog-6321089372587128676.post-57945634526781472862010-07-19T16:46:16.893-04:002010-07-19T16:46:16.893-04:00Kronos is a direct compareable that has 532,000 me...Kronos is a direct compareable that has 532,000 metric tonnes of TiO2 capacity. At an EV of 1.591 billion, the market is valuing TiO2capacity at $2,990 per metric ton <br />At 370,000 metric tonnes of capacity, Tronox's facilities have a value of $1.106 billion. This is at the high end of the POR EV valuation but still within the given range.Josh4580https://www.blogger.com/profile/01646612647304879747noreply@blogger.comtag:blogger.com,1999:blog-6321089372587128676.post-52055030846037891432010-07-18T22:36:00.337-04:002010-07-18T22:36:00.337-04:00Excuse my lack of knowledge. When we start with th...Excuse my lack of knowledge. When we start with the plan numbers, isn't there inherent risk in that?<br /><br />They're in bankruptcy because someone's original plans didn't work out, so why would this be any better? With 21% margins, even a small changes in sales can drastically impact the valuation.<br /><br />We can obviously apply a margin of safety here in both the multiple and projection numbers, is that basically how to handle for our plans not being correct?Ankit Guptahttp://www.selectedfinancials.comnoreply@blogger.com