Tuesday, August 7, 2012

Distressed Debt Prospects

SUNTECH POWER (STP) 3s of 03/15/2013 @ 38
Recent NY times article: "Suntech agreed to backstop a credit line from the bank to a company called Solar Puglia, and in turn secured collateral of its own in the form of German government bonds from Mr. Romero’s entity. The company said it now believes those bonds may be fictitious." Trading in potentially fraudulent Chinese company shares is problematic.

Unfortunately, I don't think this can be shorted. And same problem with potential fraud: "Then there are the bondholders, angry over their $400 million in loans to a company that defaulted without notice, despite a reported $206 million in cash on its last balance sheet."

ATP OIL & GAS CORP 11.88 05/01/2015 38
ATPG also has a preferred stock trading at about 10 cents on the dollar. The enterprise value through the notes is about 2 billion dollars versus the 2011 year-end PV-10 value of the proved reserves alone of $4.2 billion. Unfortunately, the majority of the PV-10 value consists of proved undeveloped reserves (PUDs), which carry much more operational risk and require much more capital cost for them to become developed and producing. Even worse is that the company operates in the North Sea and the Gulf of Mexico, which are particularly difficult from both regulatory and operational standpoints.

JAMES RIV COAL CO 4.50 12/01/2015 35

GENCO SHIPPING & TRADING LTD 5.00 08/15/2015 42

MOLYCORP INC DEL 3.25 06/15/2016 59

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