Buffett's cash will be like new found equity, except it will pay off liabilities. Then the A-L=E equation will be positive. In return, he gets a company with $100 million dollars EBITDA, and one that has relocated to the Carribean, Mexico, etc. This is going to be a strong company after it emerges from Chapter 11.
If the company isn't sold, then it will be liquidated.
Or, the company could issue a lot of new shares to pay off the debt.
But, scenario 1 is likely.
I think the judge will not let him just say the shares are worthless.
IF assets are 2.2 billion, and total noncurrent liabilities will fo from 1.3 billion to .3 billion, then equity goes from -.2 to +.8 billion. And average common stock return from chapter 11 is 20 cents on the dollar. So still, a two dollar company.
I don't know, I am sure that if there was something to this, the stock would reflect that. But it seems like there is something here. I will keep my eye on it, and thanks for the response. |
