Debt Price reflects reality before it is decimated.
I will let those with more knowledge on their liquidity decide on how in-line SMU is. SMU has to be in line with their covenants. These notes (debt) are a good reflection on SMU's True health. A price below 80 would not be a good sign. A vote of no confidence by debt holders.
From SMU>>>>
"The indenture relating to the 8% Notes and 9-1/2% Notes contains certain covenants including limitations on the incurrence of additional indebtedness, the sale of assets, liens securing indebtedness other than senior indebtedness, payment restrictions affecting subsidiaries, transactions with affiliates, future senior subordinated indebtedness and mergers and consolidations. In accordance with the indenture, the Company may incur indebtedness under senior credit facilities up to $50 million and may incur other indebtedness based upon a specified ratio of cash flow, as defined, to interest expense. The Company was in compliance with all these covenants as of December 31, 1998"
N.0.,
Even though they do not trade based on convertibility, they should trade based on expected return vs return on High quality debt (Government). 5yr gov $'s trade at 1.00 for 5.1% so 80c on the dollar for a 8% is rich. |
