Dan: I got this link e-mailed from someone that wants to sell Loewen newsletter bankrupt.com
Haven't read it yet, but it appears to offer some background.
Also found this comment:
<<KDP's Terrence Dwyer on Loewen Group Court Filing: Comment
Montpelier, Vermont, June 1 (Bloomberg) -- The following are
comments by Terrence Dwyer, a bond analyst at KDP Investment
Advisors on Loewen Group Inc., which today filed for protection
from creditors in U.S. and Canadian courts.
On the current value of Loewen's bonds:
''What it suggests are two things. First, that the market
anticipated this filing and for the last month or two has
crunched its own numbers to calculate a value to assign to the
bonds predicated on what bondholders would receive upon
restructuring.''
''While the business has its problems (it) is a viable
business at least in my mind. The problem with this company is
its balance sheet, not it's profit and loss statement. It just
simply has too much debt.''
''Everyone has been trying to figure out what it is the
company and bondholders are going to agree at (in terms of a
settlement). We're seeing the bonds at between 55 and 60 cents on
the dollar and the market seems to believe that is fair value for
those bonds in a workout scenario. I happen to think otherwise. I
think that's too much.''
''The thing that's complicating the matter is the time it
will take to literally settle this whole problem. Sometimes
Chapter 11 bankruptcies take years to settle.''>>
As I indicated on the Value thread, I've been out of the common for quite awhile...with a slight gain instead of a fat loss after digesting the last quarter's results and mulling the downside.
I'm watchin the progress of this thing and might take a position in the bonds once the smoke clears. The bonds won't pay interest under 11 of course and will eventually get most of the equity...hard to tell where it sorts out at this point...but your estimate doesn't seem out of the ballpark. Timing, as the above quote indicates, is an issue that strongly impacts return. Also, I suspect that some bondholders are going to end up with a very different investment than they bought and that could produce a "Buying opportunity" down the road a bit.
be well,
bob |
