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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (48949)	7/30/2012 3:45:31 PM
From: Spekulatius	1 Recommendation Respond to of 78740

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.

To: E_K_S who wrote (48949)	7/31/2012 2:09:10 PM
From: E_K_S	Read Replies (1) \| Respond to of 78740

Supervalue 5/2016 8% $1,000 Par Bonds goo.gl Qsip: 868536AT0 Last price: $863.30 per $1,000 Note. Bonds mature: 5/1/2016 Semiannual payments: Nov/May Yield to maturity 12.5% With the Fed signalling that they will keep rates low for another year (thru 2015), I decided to buy a few of these Corporate high yield bonds to create a ladder at maturity for some of fixed income money. These will go into my preferred & GNMA basket of bond money. Hopefully, the bonds will be paid off at Par May 2016 (or earlier) when/if SVU (1) rolls over this debt and/or (2) pay off the bonds. SVU discontinued the common dividend and are applying the proceeds to pay down this debt. Debt is also secured by their real estate holdings although it is still rated junk B- by Moody's. My plan is to holds these to maturity about four years. EKS