I have owned stocks in 2 companies that were taken control of by Carl Icahn, one in 2007 ish, one in 2010 ish. In both cases, he started out as shareholder, like myself. He then put in his board and mgmt. Then he did bonds to loan company money. He loaned less than book value of assets. I continued holding shares because I had done my dd, and it looked to me like the companies both had good potential for decent mgmt to solve their problems, they did not look like they were headed for bk.
His mgmt drove companies unnecessarily into bankruptcy (screwed around so sales were way down and they couldn't make bond pmts). So as a shareholder, he and I both lost all. BUT HE OWNED THE BONDS which were less than the value of the assets in bk and more than his stock holdings.
He extends date on bonds, negotiates asset sales, ends up with bonds that are still good plus a big share of the new company that emerges out of bk.
I end up with 0. He ends up with something he can recapitalize and do ipo or sell assets to competitors after ripping off shareholders in bk court. The power of great lawyers!!
That is why I would run if Carl were in the picture.
I don't think VB sounds as much like rapacious slimeballs as I-CON, and they don't have cash to play his game.But such things can happen. I do believe that we will end up in bk with goldenberg, but it might be slower, giving us a chance to bail.
I would like to be more optimistic, but when companies dig holes this deep, it really is a high risk game, no matter who is in control. Indeed, issuing bonds against the assets may be the way vb chooses to finance. If that happens, I will exit quickly as I won't revisit that path.
I hope 132 does really well really soon so that the new board will have decent options. The G's should be as scared as I am. I know they can collude behind the scenes to protect their wealth, but it isn't something you can brag about to the neighbors, although I guess the top .01% probably doesn't care how you got your $, just that you have it. |
