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Strategies & Market Trends : Value Investing

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To: E_K_S who wrote (48949)	7/30/2012 3:45:31 PM
From: Spekulatius	1 Recommendation of 78744

re SVu debt - at a15% discount to par the, bonds not priced for bankruptcy in my opinion. Haircuts of 50%+ are common in bankruptcies. was also wondering that the logistic unit might be spun off to shareholders and the rest of the company would go into a structured BK. This way, all those unfunded pension liabilities could be renegotiated. This would be almost certainly considered fraudulent and is unlikely to happen. The dividend cut indicates, that SVU's management is working with the lenders. i do think that the logistics division could potentially be sold, maybe to pay off maturing bonds, although i think it might be tough to get this done, since the main customer of the logistics arm is SVU, which obviously is in financial trouble. I think bankruptcy is unlikely until the bonds mature in 2015. If they cannot get them rolled over for reasonable rates, a bankruptcy filing may be the best option. An earlier bankruptcy is possible, if the suppliers start to bark and demand posting cash before delivery - SVU almost certainly does not have the cash to do it, so this would force filing bankruptcy in short order to keep the business going in one form or another.

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